Building Credit During Life's Changes | Auto Finance News | Auto Finance News

Building Credit During Life’s Changes

© Can Stock Photo / michaeljung

It’s that time of year when many folks are looking forward to high school or college graduation, a new or first-time job, or possibly marriage. Exciting times for sure! These life-changing events are opportunities to establish or improve credit. And, purchasing a vehicle can be one of the intersecting activities during these life-changing events. As a lender, you play an integral role, and have an opportunity to build a life-long relationship with new customers.

The first opportunity lenders have to work with new customers is often the teen years. An early savings account can transition into a secured credit card. Once the teen turns 18, they can apply for an unsecured card. But have you considered working with that early driver on a car loan as well? A first car purchase can do wonders for establishing credit. Even if the parents are listed as the primary on the loan, adding a teen can introduce them to the world of credit and begin to establish a credit score. Plus, the parents might appreciate the assist in educating their teen.

College graduation is another life milestone where credit and car loans can intersect. As the young adult embarks on their future, their transportation needs might change. Graduate school or a new job in another city demands a dependable vehicle. In addition to establishing credit with a car loan, this is a great opportunity to educate the young buyer on the value of vehicle service contracts (VSCs) or other protection plans. Be prepared to get down to basics on these options and clearly explain their benefits and value. Your young customer will be very price sensitive – but also concerned about the costs of unexpected repairs. Be sure your teams is prepared to provide scenarios that match the young adult’s phase of life.

Speaking of employment, first jobs are also an intersection for credit. These days, employers often check credit scores and credit history for potential hires. Having no credit – or poor credit – can mean the difference between getting hired or passed over. As you work with your teen/young adult customer, take a few minutes to enlighten them on these details. Provide examples of credit reports and discuss how they can access their own credit report. Make sure your young customer also understands the basics of credit accrual and the damages incurred by making poor credit decisions. By providing this valuable education at a critical point in their lives, you are strengthening your relationship.

Finally, your valued customer whom you have worked with for several years, is getting married. You’ve done a good job educating your customer on the value of credit, secured one or more car loans and made sure they had a strong credit history. Their new spouse may not have received the same service and support, and their credit is poor or lacking. Here is another opportunity to work with the new couple, discuss future plans for home ownership or the costs associated with trading in a vehicle for something larger or more accommodating for a car seat!

Being a valued credit partner during these life-changing events takes time. The return may not be automatic or immediately quantifiable.  But one day, when that valued customer comes in to discuss preparations for retirement, you can reminisce about their first car, first job, wonderful wedding, cars purchased for children, graduation ceremonies, etc. And you will know you have truly built a lifelong customer relationship.

With more than 40 years innovating consumer protection products that enhance profitability and customer retention, EFG Companies knows how to help lenders maintain long-term customer relationships. Contact us today to get started.

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