Most contractors find that people who finance home improvements tend to spend more than those who pay cash. Contractors who understand the various types of credit products and know how to present them will be more likely to lead the customer to make the decision to finance.

First, however, you must determine whether someone is a candidate for financing. The only accurate way to do that is by asking them to fill out an application, and to pull their credit score. Some salespeople try to pre-qualify prospects on “instinct,” taking cues from things like the car in the driveway or the condition of the home's exterior.

According to Matt Hines of American Eagle Builders in Arlington, Texas, that's a sign that the salesperson isn't doing his job, which is to listen to the customer, look at the numbers, and offer solutions. “We had one salesman who refused to follow up on a lead because the house looked old. Another guy went there and got a great deal.” And the tendency to prematurely judge prospects isn't confined to home improvement. “I used to be in the car business,” Hines says. “One day, a guy pulled up to the dealership in an old Cadillac diesel that was probably worth $500. No one else would wait on him, so I did. It turns out he owned five banks and became my best customer. He bought every vintage sports car that came through that dealership.”

On the flip side, don't automatically assume that someone with plenty of cash is not a candidate for financing, advises Michael Gorman, whose Lakeland, Fla., company, TechKnowledge, trains contractors in sales, marketing, and estimating. Gorman was a contractor in Denver for 20 years, and although he had great success offering financing, he could never predict who would take it. “I have had wealthy clients who wanted to liquidate their investments to pay for the job, then changed their mind after talking with a financial adviser,” he says. “That made them a good candidatefor financing.”


You are more likely to sell a prospect on financing if you can talk intelligently about the pros and cons of different financing products, and if you understand which one is most likely to solve their particular problem. The more credit options in your portfolio, the more success you will have. What follows is an overview of the most common credit products, along with some tips for using them.

Credit cards are an obvious choice for small jobs, especially if your salesperson needs to close the sale on the first visit to the home. And since everyone knows how credit cards work, they don't need any explanation. Accepting them is an easy way to help people say “yes.”

But you can also use plastic to sell larger projects. Gorman says that the frequent flier miles that many credit cards offer are a great way to close sales with people who like to travel. “If a customer balks at a $200,000 bid for a remodeling project, we say, ‘What if we can also offer you two round-trip tickets to Europe?'” Then Gorman shows them how the miles they earned with the purchase will pay for those tickets. If they don't have a card that offers miles, he tells them they should get one. Then he suggests that the customer get a lower-interest installment loan to pay off the credit card. If their card offers a $20,000 credit limit, he lets them pay in $20,000 monthly increments.

The downside, of course, is the charge to the contractor. Gorman says that Visa and MasterCard charge 3.5% of the sales price, which means that the job costs more. “I can only make that work if I go in at a high enough price,” he says.

Revolving credit accounts work like store credit cards but without the plastic. They're a good way to generate repeat business because you're the store: Customers can only use these accounts with one of the finance company's authorized contractors.

Revolving accounts are used to finance everything from $200 handyman jobs to $30,000 bath remodels. They may be secured or unsecured depending on the lender, but once the customer has set up an account, they can use it again and again.