Ask a home improvement salesman to describe his worst nightmare and chances are it involves a five-figure contract turned down because of bad credit.
All that work for nothing.
Most companies have a procedure for rescuing credit turndowns before the deal itself goes defunct. At Renewal by Andersen in Massachusetts, reps phone the finance company from the prospect's home, during the presentation, to get approval.
“If there's a decline,” owner John Esler says, “[the rep] hangs up and explains that the bank didn't approve, but it's not a problem, because we have an in-house financing department.”
That department can then settle on any one of several approaches — a revolving credit loan, a secured home equity line, or a home refinance — with the company's primary financing vendor. Should those not pan out, Renewal turns to its backup stable of 300 other lenders.
Get There First It's not uncommon today for salespeople to call the finance company from the prospect's home. But when that doesn't happen and a credit application is submitted and comes back declined, banks are required to notify applicants in writing. In that event, “you have to call the customer before that letter shows up,” says Vaughn McCourt, director of operations at Statewide Inc., a window replacement company based in Mukilteo, Wash., where in 2005 some 74% of jobs were financed, and 88% of credit applications were approved.
When someone from Statewide does call, he or she explains the customer's options. “If our lead-out company turns it down, it goes to our second mortgage companies.” If the financing still can't be arranged, Statewide refers it to one of a number of mortgage brokers that the company deals with. At that point, McCourt estimates that the chances of obtaining financing are about 5%. “It depends on how badly they want the windows,” he says.
Bad Credit Ken Bressler, president and general manager of Builders & Remodelers, a roofing, siding, and window company in Minneapolis, says that those customers who get turned down are often not surprised. “If they have credit problems, they know about it,” he says. What is sometimes surprising is their level of indignation. “A lot of times those we think would be the least offended are the most offended,” Bressler says. But, he adds, credit rejects aren't thrown away. They're contacted after a year or two, “when things may be different.”
Salespeople can become discouraged upon learning of credit turndowns, but McCourt says that they need to be trained to accept the possibility as part of the job. “Whatever you write, you're going to keep 70% of,” he says, when cancellations and credit rejects are factored in. “When we go to those special mortgage companies, we let [the reps] know it's a long shot, and not to go spending the commission money in their heads.”