Are you aware that over forty five million adults in the United States have no credit score? It is not that these people have bad credit; they simply are not in the credit system. Many home realtors are not familiar with this huge untapped market for first-time homebuyers because it is assumed that anyone without a credit history would be disqualified for a home mortgage. However, studies have found that many of those included in the large unbanked segment of the population are actually financially able to purchase a house, with ready cash and good-paying jobs. These hidden first time homebuyers are eager to purchase residential property and take advantage of today’s still affordable interest rates. Unfortunately, because these consumers do not have traditional credit cards, auto loans, student loans or personal loans, they do not exist in the databases at the top three credit bureaus. Uncredited market segments, such as recent college graduates, millennials, divorcees, legal immigrants and others are financially invisible (“ghosts” to lenders). Without a credit report or credit score, applying for a home mortgage would seem difficult if not impossible.
Renters (and most home realtors) do not realize that their biggest monthly payment – RENT – is now eligible to be included on their credit report and used in mortgage decisions. Establishing credit, one of the key decision makers that mortgage loan officers use in approving a home loan, is critical. With growing awareness, knowledgeable brokers are referring renters to companies that offer on-time rent reporting services. These services disclose rental payment histories to credit bureaus, bridging the gap between renters and credit bureaus to quickly establish credit. In fact, the on-time rent reporting services report that many referrals come from realtors who are willing to wait for homebuyers to secure good credit and credit scores.
Internet signup is easy to use and the services are inexpensive. Renters simply log online to a rent reporting service and fill out a short application that authorizes their landlord or property management company to confirm proof of their on-time monthly rental payments. These rent payments (that can go back two years or more are then reported to the credit bureaus, enabling consumers to generate a credit report and score.
Home realtors may be skeptical about whether rent can quickly establish credit reports. Thanks to social media, such as Facebook, Google and Yelp, there are hundreds of Internet reviews that first-time homebuyers post about how their credit situation changed and they were able to qualify for a home mortgage. On-time rent payment services offer varying levels of money back guarantees that should be compared with when selecting which service to use.
Home realtors now have a new tool to turn once unscorable applicants into closed deals.
Author Bio
Cullen Canazares is CEO and founder of Denver-based Rental Kharma, a leader in on time rent reporting services. Click here for amazing Facebook reviews. Rental Kharma was founded to provide a simple way for renters to establish and build credit history through their largest monthly payment - RENT. Canazares also founded ISP Leapfrog Internet in 2001 and recently graduated from Stanford University Graduate School of Business Latino Entrepreneurship Initiative program.
