Even though you’re in the trenches every day, buying a house is a big deal for your clients. It requires many involved steps and processes that can seem overwhelming to any buyer. And one of the more intimidating steps is obtaining a loan, which generally requires a decent credit score.
While this is a given for real estate professionals, few consumers know what actually comprises a credit score. Credit is a term thrown around quite frequently and not always expanded upon. And since you won’t necessarily be there to walk your clients through the process of meeting with lenders, you’ll want to prepare them as much as you can. Combining tips from presentation coach Jim Harvey with a recent post from the National Association of Realtors on credit scores, we put together this guide to helping your clients tackle the credit score question.
Know your audience
As you begin the conversation, don’t be afraid to ask general questions that get to your clients’ knowledge of credit. Do they have a credit card? Do they have any student loan debt? Do they know what their credit score is? Knowing where your clients are in their financial decisions and what their knowledge level is will help you to tailor the information you give them and make it more relevant to them in the buying process. This will also give you a starting point from which you can build on their knowledge.
Give clients an anecdote and come up with analogies. This tactic puts an unfamiliar concept into more familiar terms and can help people wrap their heads around an idea. You might say a credit score is like a resume, wherein past experiences and practices are documented — except instead of a job, the subject is going for a loan.
Explain the typical timeline
Walk buyers through the process, from the purchase and credit line decisions that could affect their score to prequalification and preapproval to the process of applying for a mortgage. Many don’t understand what happens after they’re approved but before they close, a time period that can be treacherous in terms of keeping the financial details of a deal together, so don’t end the timeline prematurely.
Avoid technical language
You may be the expert in the room, but don’t try to sound smart. Throwing in terms like LLPAs and loan-to-value ratio isn’t going to impress your audience; it’s just going to confuse them and heap more unknowns into the mix. They already chose you to help them make the biggest purchase of their life, so keep the hubris to a minimum. It’s OK to use terms so they can learn to identify them in the future, but don’t rely on finance jargon.
Use visual aids
Many people learn by seeing what it is they’re hearing about for the first time. Check in with lenders and mortgage brokers that you work with frequently and ask if they have charts or infographics that help to break down complicated loan processes. You can check also out the visuals in the aforementioned NAR blog entry to see if they might help you explain the categories that make up a FICO score or average student loan debt amounts.