When it comes to purchasing a home, or anything that requires a loan for that matter, a low credit score can really hurt the buyer. Clients may approach an agent feeling downtrodden and discouraged about buying a home if they have a "bad" score.
Luckily, there are some ways that agents can get creative to help these homeowner hopefuls get into a property.
Improving the Score
If the client can - they should improve their credit score ASAP, even by a few points. This shows improvement, more reliability, and gets the ball rolling when it comes to raising a low score. All of which are big wins when it comes to the credit score game. Agents can work with their clients to guide them on why a credit score is so important.
Clients paying off their debt is a great start. Also, they can always ask creditors to drop late payment dings that are very old, etc. - which will help their report look more clean.
Don't forget about credit cards. Remind clients ASAP that overspending on their cards is the number one reason people fall into debt and stay there.
Lastly, don't forget that agents can still serve buyers with less than desirable scores. After all, there's FHA loans and other loan programs out there for buyers that aren't "the ideal candidate". Start with figuring out what your client does bring to the table and how you can best utilize what strengths they do have, financially speaking, and get to writing those offers!
Credit Score Ranges
Generally speaking, credit scores fall into the following ranges:
- 300-579: Poor
- 580-669: Fair
- 670-739: Good
- 740-799: Very good
- 800-850: Excellent
Clients may have heard that a good rule of thumb is a score of 700 and above. While this is a great number to shoot for, and is true, credit scores above 670 are technically considered "good". That being said, if a client is coming in with a low down payment, the higher the score number - the better. This will help buyers get a good rate for their mortgage.
At the end of the day, agents can't solve their clients credit woes for them. But, they can still work with them to find the best possible scenario for their home-buying goals.
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