threeXfive: Why Realtors Should Focus On a Client’s Credit Score Sooner Than Later

Transcription:
Rick Grant: Welcome to threexfive from CreditXpert. This is the show where we delve into the important issues of the day, with three key questions answered in just five minutes. Our expert today, CMO Mike Darne. Our topic today is the real estate sales business and the new MCPI. Question one, if I’m a realtor, why should I care about the client’s credit score. What’s in it for me?
Mike: We’re in extraordinary times for home buyers. So we’ve got the combination of low inventory, double-digit year over year home price increases, and interest rates that have nearly doubled in the past 12 months. We know that realtors are focused on one thing, and that’s helping their clients find and purchase their dream home. CreditXpert can help make that easier in a challenging environment like we’re in now. One thing to keep in mind is credit is not only the number one reason mortgage applicants are rejected, but credit is also one of the leading drivers of the type of loan programs that people can qualify for. And credit’s a primary driver of interest rate as well. In normal conditions, a higher credit score definitely matters, but if you think about the current environment we’re in, it really, really matters. A higher credit score could mean the difference between your client qualifying for a mortgage or being left on the sidelines. That higher credit score could help your client increase their purchasing power by helping them qualify for something like a jumbo loan. And for a lot of clients, a higher credit score could act as a hedge against rising interest rates by helping them qualify for a lower range. The short answer to your question of “What’s in it for me” is a lot, making sure that your clients are coming to the table with a strong credit position will help you do what you do best, which is sell homes. And when you deliver this level of experience, word’s going to get out, which will mean, more referrals.
Rick: Well, that sounds great, Mike, but how do realtors ensure that their clients are coming to the table with a strong credit position?
Mike: Yeah, so what we found… And we did research on this last year. We found that most prospective home buyers will have an idea of their credit score as they start shopping for a home. The problem with that is that the score that they’ve been tracking is likely not the same score that mortgage lenders will use to underwrite their mortgage. And as we talked to mortgage lenders, we found that the score that they think they have is often lower than their mortgage credit score. So the most important thing you can do to help your client come to the table with a strong credit position is to start working early on in the process with a lender that uses CreditXpert. Lenders that use CreditXperts can quickly see the credit potential in an applicant and generate a plan to help them reach their target score. We’ve trained our predictive models on nearly a billion mortgage credit increase over the past 20 years, and we know what it’ll take to help your clients reach a target score. So when I speak to realtors, I’m always encouraging them to talk to their lender partners and ensure that they’re using CreditXpert on every one of their clients.
Rick: So, Mike, is there a way for realtors to get a sense in advance of their clients’ potential before working with a lender?
Mike: Yeah, so of course the absolute best way to understand a specific client’s credit potential is by having a lender run CreditXpert against their credit file. That said, I think it’s important for realtors to get a sense of the opportunity for their clients. So when I joined CreditXpert a little over a year ago, I started looking at the credit potential for the millions of inquiries that we analyze each year. And I expected to see significant potential in the lower credit bands, as I assumed that there would be some real simple ways that they could increase their score. And as I expected to see as well that opportunity trail off in the higher credit bands, because my assumption was is that those people are better at managing their money. But I found was that the potential was incredibly uniform across all credit bands. In fact, we found that 71% of those with an initial credit score below 760 could increase their score by at least 20 points within a 30-day period. So this blew me away, and it inspired us to launch the Mortgage Credit Potential Index, or we also refer to it as the MCPI. Each month, we release the credit potential for each credit band using real data from the prior month. And we’ve also recently launched an interactive calculator on CreditXpert.com that leverages the same data to demonstrate the percentage of people with a particular credit band that could increase their score by 20, 40, 60, 80 points or more within that 30-day timeframe. So this can be a great tool for realtors to help inspire their clients to put in the work to strengthen their credit position as they’re out shopping for a home.
Rick: Thank you, Mike, and thanks to all you for watching. We’ll see you next time on CreditXpert’s threexfive.