[factorfinders]

I understand that lenders need to have a full picture of who refers them deals. However, will someone help me understand why a lender would require the authority to pull the ISO owner's personal CREDIT Report? Background report I understand, but credit report?

The lender insists that they don't pull credit, but when I crossed the authority out on the application it was rejected.

No big deal as we were just trying to add an additional C-D funder to our portfolio.

Appreciate the education, thanks.

[jotucker1983]

I understand that lenders need to have a full picture of who refers them deals. However, will someone help me understand why a lender would require the authority to pull the ISO owner's personal CREDIT Report? Background report I understand, but credit report?

The lender insists that they don't pull credit, but when I crossed the authority out on the application it was rejected.

No big deal as we were just trying to add an additional C-D funder to our portfolio.

Appreciate the education, thanks.

Credit reports are apart of the background checks these days. Every Employer (for the most part) is pulling your credit after they make the decision to work with you as a direct hire or as a Partner. If one has bad credit, it can surely stop an Employer from hiring you as a direct hire, not sure if it will stop you from becoming a Partner or not, but it "could".

[AndyYSCISOdept]

This is something I've only ever seen in a few instances and it was usually when we as a direct lender were trying to set up as a split funder with a processing company (ie First Data) However, it could be some new kind of requirement. That would make me very uneasy, I know that I've never pulled any credit on any ISO that sends/funds business with us. Anyone else have any more insight?

[Funder Mark]

I am pretty sure On Deck requires it, and I know that Pearl used to, not sure about now.

[AndyYSCISOdept]

Im sure On Deck requires it as part of the whole publicly traded company want to vet out whom we work with thing.

[Chambo]

I understand that lenders need to have a full picture of who refers them deals. However, will someone help me understand why a lender would require the authority to pull the ISO owner's personal CREDIT Report? Background report I understand, but credit report?

The lender insists that they don't pull credit, but when I crossed the authority out on the application it was rejected.

No big deal as we were just trying to add an additional C-D funder to our portfolio.

Appreciate the education, thanks.

They are beginning to self regulate. They don't want to just take on anyone, because they happen to call themselves an ISO.

Next in line will be the new California laws about ISO referrals . Thanks Jeremy Brown for filling me in there.

[factorfinders]

Credit reports are apart of the background checks these days. Every Employer (for the most part) is pulling your credit after they make the decision to work with you as a direct hire or as a Partner. If one has bad credit, it can surely stop an Employer from hiring you as a direct hire, not sure if it will stop you from becoming a Partner or not, but it "could".

Understand that many employers pull credit when hiring, but this is a very different situation as I am the Managing Member of an LLC. The transaction is between two business entities. As a point of clarification, the business entity has employees, an office lease and all the trappings of a legitimate business. My biggest complaint was we were assured that the funder doesn't pull credit, but when I crossed out the authorization the agreement was rejected. Which is it?

[factorfinders]

This isn't On Deck. Definitely a C-D lender.

[FUNd]

They are beginning to self regulate. They don't want to just take on anyone, because they happen to call themselves an ISO.

Next in line will be the new California laws about ISO referrals . Thanks Jeremy Brown for filling me in there.

Thank God for that. A lot of us have had a rough patch here and there, but someone who has a long history of flaking on creditors shouldn't be advising others how to make smart financial decisions. I applaud any barrier that makes it more difficult for new entrants to the space that don't measure up.

[AndyYSCISOdept]

Thank God for that. A lot of us have had a rough patch here and there, but someone who has a long history of flaking on creditors shouldn't be advising others how to make smart financial decisions. I applaud any barrier that makes it more difficult for new entrants to the space that don't measure up.

I'm with you on this one, I remember the massive influx in people coming into the space that had no business being here and earned that reputation based on their business practices. And since then I have seen the bedrock of the industry, the guys who want to see what we have protected, take a stand and make a difference. I'm not sure that pulling credit is 100% necessary but it cant hurt I guess.

[Zach]

I think this should be mandatory for all lenders. Do you really want the guy with 10 counts of fraud and financial crimes sending you deals?

[GoodCustomerService]

Pearl requires an ISO Background. Won't fund a deal for anyone without it.

[Funder Mark]

What about a passive system, built by people within the industry? Imagine if 15 companies get together, and make a list of all the merchants who screw them, and ISO's/reps who are guilty of fraud/stealing deals/other crap. By passive I mean that the only way to check it is to put in a ss# or EIN, so you cannot just see all defaults and bad agents within the field, but whenever you have a deal you can run it through the database, and it would show what other people in the network say.

That would help keep out bad ISO's, and would help keep the industry clean.

[factorfinders]

To clarify, my initial question wasn't about a background check, but a credit check. I am fine with your checking my criminal background, but not my personal credit. So in for my company to refer a deal to yours, you advocate that my personal credit needs to be reviewed and dinged? Why?

Once again, the bigger issue is that the funder claims that they don't check ISO crit, but insist upon leaving it in the application.

[Chambo]

Pearl requires an ISO Background. Won't fund a deal for anyone without it.

Coming form Pearl, that is a MAJOR CHANGE (and somewhat ironic)

[Chambo]

To clarify, my initial question wasn't about a background check, but a credit check. I am fine with your checking my criminal background, but not my personal credit. So in for my company to refer a deal to yours, you advocate that my personal credit needs to be reviewed and dinged? Why?

Once again, the bigger issue is that the funder claims that they don't check ISO crit, but insist upon leaving it in the application.

I believe that is soon to be against the law in NY State.

[jotucker1983]

Understand that many employers pull credit when hiring, but this is a very different situation as I am the Managing Member of an LLC. The transaction is between two business entities. As a point of clarification, the business entity has employees, an office lease and all the trappings of a legitimate business. My biggest complaint was we were assured that the funder doesn't pull credit, but when I crossed out the authorization the agreement was rejected. Which is it?

It could be that they do in fact use credit reports as apart of their background checks, and whomever you were speaking with (maybe an ISO/Broker Support Staff Member) provided you inaccurate information?

From my experience, when an Employer says they are going to do a background check it will include not just criminal history, but also your credit report, driving record, any professional licenses you hold, tax liens you might have, the status of your US citizenship, the whole nine yards.

You are considered 1099 when you sign up with a Lender, so they might or might not include a credit report within their background checks. But I worked with some Lenders that pulled my credit to authorize me as a Broker even way back in 2010.

[BigIz]

They are beginning to self regulate. They don't want to just take on anyone, because they happen to call themselves an ISO.

Next in line will be the new California laws about ISO referrals . Thanks Jeremy Brown for filling me in there.

Chambo, I could not tell by your post if you were for or against the new ISO regulations in California?
It seems to me that the new bill loosens up the law against ISO referrals in California. It is now legal for an ISO to get paid a referral fee on a commercial loan from a licensed lender. It was illegal before.
The new law limits the rate to 36%, the loan must have a minimum term of 1 year, there is a very specifically worded disclosure about the referral fee being paid and there are provisions against false advertising.
I think in general the law is OK and that is where the federal regulators will eventually go also. The big drawback in the new law is the fact that the ISO can only make the initial introduction and is not allowed to participate in any of the loan process.

As far as background checks go, I was in the title insurance industry for 20 years, prior to the 2007-2008 financial crisis and had good credit. I have not been able to fully recover from that since. I am actually fine with a lender running a credit check on the principals of a Company they are going to do business with (I am an LLC also), as long as my credit by itself does not disqualify me to get signed on as an ISO. If you see that my credit is bad, ask follow up questions to verify the situation. Are you just bad at handling your finances or have you gone through a financial crisis yourself. In 2011, I helped to start up a new title company and the California Department of Insurance and our underwriters all did credit checks. They followed up with direct questions to me and we had no problems getting approved.
I think more importantly than credit checks are criminal background checks.

[funding pro]

Here's the reality of the situation. There are people out there who have never paid a bill in their lives. We see them all the time on the merchant side and sure enough they exist on the ISO/Agent side of the business. Call it what you want, but people who take on credit lines and intentionally do not make payments are crooks. If every account you have ever had is in collections there is something wrong. I dont think the funding companies that are requiring a credit check are looking to see if you have never missed a payment on your AMEX card, they are checking to see if you are a deadbeat. Many of those individuals will lie, cheat and steal to get more money and a funding company does not want it to be at their expense. I for one tell any funding partner that I will not agree to it simply because I dont want the inquiry and have never had them decline to move forward.

[len@accfunding.com]

You think having your credit pulled is a big deal? When I got my mortgage lenders license in New York, in 2005, I had to hire a private investigator and pay him to do a complete background check on me which included having my fingerprints taken. The final report that he needed to send to the state was the size of a phone book.

To clarify, my initial question wasn't about a background check, but a credit check. I am fine with your checking my criminal background, but not my personal credit. So in for my company to refer a deal to yours, you advocate that my personal credit needs to be reviewed and dinged? Why?

Once again, the bigger issue is that the funder claims that they don't check ISO crit, but insist upon leaving it in the application.

[FUNd]

You think having your credit pulled is a big deal? When I got my mortgage lenders license in New York, in 2005, I had to hire a private investigator and pay him to do a complete background check on me which included having my fingerprints taken. The final report that he needed to send to the state was the size of a phone book.

Fingerprints are pretty standard in the finance biz. My girlfriend worked as a teller at Bank of America and had to have them done. This space is the most lenient of any I know as far as background investigations, it needs to change, and no I don't mean we need the feds helping us.

[brokerCompany]

Most on this board are doing cash advances not loans so the fed will never regulate. Criminal background search is fine with me.
I only had a couple of banks we do business want to do a credit check on me, I said no and moved on to another bank.
My credit is stellar and I dont want a funder pulling credit on me when I sign up with a new one. How will that look when I try to purchase a new house etcc and I have 5 "lenders" that pulled my credit. THe bank will think I am shopping for credit. But it may come to this from the funders side if they have to many dirty deals.

[jotucker1983]

The fact is that the barrier to entry into this space is extremely low, doing extensive background checks (including credit pulls) is one way to push people out of the space. Credit inquiries only affect your FICO for the first 12 months and play a very small part in your actual credit scoring.

This industry reflects very heavily on The Pareto Principle, where 80% of the people on the telephones calling on merchants will be gone from the industry within 6 months. That's a shame, because all it does is hurt the other 20% who have actually been here and will be here for the long haul, providing real value to this industry (by having built it) from doing their job and gaining access to merchants.

Think about it for a minute? Funders are hiring Joe Blow, without a credit check, without a full criminal history check, and without any other quality background check, and Joe Blow is collecting social security numbers, bank statements, tax returns, home addresses, etc. of merchants. Does that not sound scary to you guys?

[KTK]

JoTucker, you pass wise words on this forum. Also from reading your posts you are an honorable man and really have your clients best interest at heart. Much respect given!

However, if Joe Blow wants to call merchants and pitch them that they can get them funded, promise the world, collect their personal and banking data, and utilize it to do criminal acts/steal identities/fraud, etc he will do so with or without a ISO agreement in place. He doesn't need an agreement with XYZ Lending to commit fraud.

An ISO agreement is a b2b contract and I really don't see the relevance nor will I allow a lender to check and see weather I ever missed a car payment to decide weather I can send them deals or not. An employer that pays me a salary, kicks in on my health insurance, and provides the leads phone and computer? Yeah they have the right.

Criminal, especially an "ONDK" who has regulators and shareholders to answer to, I can see the relevance and importance. But credit? I disagree.

I agree with the OP and would have crossed out the credit portion as well. If they rejected my agreement very simple....NEXT! There are dozens others who will make the same offer, pay the same commissions just as fast, and would kill for a consistent stream of solid deal flow.

Just my 2 cents

[golf2014]

how bout the lenders who run credit without an app...one guy today dealt with one iso..credit pulled 17 times in a week