[Tony Zenkewich]

Hi Brokers
I am wondering if its a good idea to run the applicants credit before forwarding to a direct funding company. It seems to me this is a good idea so we can determine if these applicants are A,C,D paper etc. Also we know some applicants lie; so i would rather not send worthless paper to a funder. However they will lose some points on the score. So please let me know if you think it would be worthwhile. Or any suggestions. Thanks in advance.

[Triton]

Each lender is going to run credit themselves so it wouldn't help in that area. But if you want to better classify your files, I recommend running a soft pull so it doesn't ding their score.

[MCNetwork]

I think it's a good idea so you know what you're working with, but as an ISO you have to make sure it makes economic sense. Running credit isn't cheap. I usually just let the funders do all the legwork for me. Plus a customer might take exception to seeing a credit pull from an ISO and then a pull from the funder. People with high credit scores will get ticked off.

[J.Celifarco]

Hi Brokers
I am wondering if its a good idea to run the applicants credit before forwarding to a direct funding company. It seems to me this is a good idea so we can determine if these applicants are A,C,D paper etc. Also we know some applicants lie; so i would rather not send worthless paper to a funder. However they will lose some points on the score. So please let me know if you think it would be worthwhile. Or any suggestions. Thanks in advance.

It costs money to pull peoples credit, so you are incurring an extra expense on every file for what I deem very little gain. If the main lender you work with gives you solid info on your declines and get to files in a timely manner you should be ok.. Submit to them hopefully if they are your main lender the majority of the deals will work with them, if not take the info from the decline and decide where to send the file.
Unless you are a huge ISO who has negotiated better buy rates based on funding numbers I dont see a need for this. In the case that you are that size and quotas to hit with different banks then you need to pull credit so you know what bank fits best but other then that scenario I dont see a need for this

[Tony Zenkewich]

Thanks everyone who has replied. Greatly appreciated.

[jotucker1983]

Tony,

I wouldn't waste the time nor capital pulling your client's credit, not only does it add more legal procedures into your activity but your Funders/Lenders are going to pull their credit again anyway. On top of this, Funders/Lenders usually have a credit "formula" that they go by to score a merchant, rather than just a standard Experian pull for example.

Unless you are a huge ISO who has negotiated better buy rates based on funding numbers...

This is not on topic, but I keep hearing about this on the Forum, are there Funders/Lenders really doing this? I've been using a lot of the same partners for awhile and nobody I work with says, "Hey John Tucker, unless you are funding $1 million a month we can't give you the special premium pricing". It's always the situation of if the merchant I've submitted is A Paper and qualifies for the special premium pricing, then it's available. Why wouldn't it be?

I'm trying to figure out from a Funder/Lender's perspective, how would this make sense?

So let's say you have a solid A Paper deal on the table from a guy that only submits 3 apps a month, but this particular deal is solid. The guy tells the Funder that his merchant has 3 competing offers and the Funder could easily win this account by giving the broker the special premium pricing that the merchant qualifies for, but opts not to give it to him (because he's not a large broker house) and thus loses the account?

I guess this is another thing that Funders/Lenders are doing that I just think makes no sense lol.

[omegafund]

Why not have your merchant pull their own credit with fico scores, will not hurt them in anyway.
That is readily available to anyone and while not the same as a credit report for lender it will give you a good idea how your merchant looks and what other inquiries are on the report.

[Triton]

Why not have your merchant pull their own credit with fico scores, will not hurt them in anyway.
That is readily available to anyone and while not the same as a credit report for lender it will give you a good idea how your merchant looks and what other inquiries are on the report.

When a merchant (or you and me) for that matter pull your own credit you are not looking at a FICO score. You are looking at Experian, Equifax and Trans Union's own internal risk score. That's why 90% of the time when a merchant tells you "I just checked my credit yesterday and it's 650" then the lender declines the deal because their actual FICO score is 550.

We as US citizens have over 800 credit scores and they all have different scoring methods for different purposes. The FICO score is just the calculation method used by lenders in general.

Also, the only place to check your own personal FICO is as myfico.com but there is a fee involved. Pretty cheap though, I have the service and it's less than $30 a month.

[omegafund]

When a merchant (or you and me) for that matter pull your own credit you are not looking at a FICO score. You are looking at Experian, Equifax and Trans Union's own internal risk score. That's why 90% of the time when a merchant tells you "I just checked my credit yesterday and it's 650" then the lender declines the deal because their actual FICO score is 550.

We as US citizens have over 800 credit scores and they all have different scoring methods for different purposes. The FICO score is just the calculation method used by lenders in general.

Also, the only place to check your own personal FICO is as myfico.com but there is a fee involved. Pretty cheap though, I have the service and it's less than $30 a month.

Yeah I know that is why I said not the same thing. But if you know how to read credit reports you can see open tradelines,timeline,balances,judgements etc inquiries,etcc. Good starting point if you are not going to pull credit. Have merchant pull all 3 reports and have them see the differences educate them and let them know a lender things are scored differently. If you see lots of inquiries, late pays etc you know a lender will not view that great.

[jeffcapital]

Use www.creditkarma.com .... They will tell you your fico scores on 2 bureaus for FREEEEE and give you FREEE monitoring services....

[Triton]

Yeah I know that is why I said not the same thing. But if you know how to read credit reports you can see open tradelines,timeline,balances,judgements etc inquiries,etcc. Good starting point if you are not going to pull credit. Have merchant pull all 3 reports and have them see the differences educate them and let them know a lender things are scored differently. If you see lots of inquiries, late pays etc you know a lender will not view that great.

Agreed.

[YuliyaG]

Use www.creditkarma.com .... They will tell you your fico scores on 2 bureaus for FREEEEE and give you FREEE monitoring services....

Maybe have client send a screen shot of their credit karma score?

[Chambo]

Why not have your merchant pull their own credit with fico scores, will not hurt them in anyway.
That is readily available to anyone and while not the same as a credit report for lender it will give you a good idea how your merchant looks and what other inquiries are on the report.

Because ALL the funds don't care, they are going to run their own credit anyway

[Triton]

Maybe have client send a screen shot of their credit karma score?

Credit Carma doesn't give actual FICO scores. Just the Experian Plus score etc...

[omegafund]

Because ALL the funds don't care, they are going to run their own credit anyway

Right but original question "if its a good idea to run the applicants credit before forwarding to a direct funding company" Having merchant pull own credit from whatever source(s) was just another option so save yourself company expense to run credit and to get a gauge on how applicant looks.
Even when funds pull their own credit they dont usually share the full report with iso or broker. So broker is still running a little in the dark

[FUNd]

Nothing says professional commercial funding operation like "Hey bro, go run your credit at Credit Karma and get back to me."

[jotucker1983]

I think just asking a merchant for his estimated credit score would be sufficient during the initial pre-qual. Credit Card Issuers, Credit Karma, Credit Sesame, Credit.com, and others all provide some variation of an estimated credit score, so it's more than likely your merchant has some idea what it "might" be.

But I wouldn't pull any merchant's credit, it opens up additional legal procedures and most funders/lenders go through a particular "credit analysis" formula to determine a merchant's final credit grade anyway.

[MCNetwork]

I think just asking a merchant for his estimated credit score would be sufficient during the initial pre-qual.

That's like asking him how much revenue he does per month. During the initial sales call, merchants overestimate their numbers by 30-50%.

[YuliyaG]

Nothing says professional commercial funding operation like "Hey bro, go run your credit at Credit Karma and get back to me."

Just and idea... But I surmise that if you can ask a merchant for 5 points in closing fees on top of the funding amount, you could get this if it was important to you.

But, a better idea would be for all brokers to get serious and start pulling decision logic within that first 10 minutes. If brokers pull their on Decision Logic, they can get a good gauge of whether or not a merchant is fundable by looking at banks, particularly deposit volume and average daily balance. It worked great for us in the past and we'll be using that approach going forward. Getting a merchant on the phone and hustling to get back dud bank statements has got to be a time suck as those hours added up in aggregate can go to getting more in the pipeline.

[AndyYSCISOdept]

Asking a merchant to complete a decision logic on the opening call without bringing anything to the table, potentially anyways, just wouldn't work.

[Michael I]

Just and idea... But I surmise that if you can ask a merchant for 5 points in closing fees on top of the funding amount, you could get this if it was important to you.

But, a better idea would be for all brokers to get serious and start pulling decision logic within that first 10 minutes. If brokers pull their on Decision Logic, they can get a good gauge of whether or not a merchant is fundable by looking at banks, particularly deposit volume and average daily balance. It worked great for us in the past and we'll be using that approach going forward. Getting a merchant on the phone and hustling to get back dud bank statements has got to be a time suck as those hours added up in aggregate can go to getting more in the pipeline.

Now I understand why you sell leads and don't broker .
How many lenders are you cutting out by the fact that you are getting decision logic and not the bank statements . There is no way a broker can compete in today's market by handicapping themselves like that .
Also how many merchants will you lose on the first phone call when you request that right away ?

[YuliyaG]

Asking a merchant to complete a decision logic on the opening call without bringing anything to the table, potentially anyways, just wouldn't work.

But we did just that... They clicked button on site. Filled out form. Completed Decision Logic. When they were stuck, we got them on the phone and manually created the request. Furthermore, companies like MCA Suite have baked this right into their CRM. When you do take that approach you're helping yourself in another way. You're making it a bit more difficult for the next guy to get statements.

[YuliyaG]

Now I understand why you sell leads and don't broker .
How many lenders are you cutting out by the fact that you are getting decision logic and not the bank statements . There is no way a broker can compete in today's market by handicapping themselves like that .
Also how many merchants will you lose on the first phone call when you request that right away ?

1. Every funder we've ever submitted a file to accepts decision logic for initial undewriting but require final and full statements to close file. So, the statements became a stip in a sense. Also, some funders APPRECIATE the CSV file we are able to send after request is generated because their underwriter can quickly plug in those numbers. Thus, faster approvals.

2. There's no way a broker can compete in today's market if he's not investing in saving his most precious asset; time.

3. Merchants are happy to go to complete Decision Logic if you give them a choice; "you can send in your last 4 months bank statements, or I can get you offers in a couple hours if we are able to log into your bank." All funders do a bank verification before funding so with repeat customers this tends to work exceedingly well.

[rick_clsfunding]

1. Every funder we've ever submitted a file to accepts decision logic for initial undewriting but require final and full statements to close file. So, the statements became a stip in a sense. Also, some funders APPRECIATE the CSV file we are able to send after request is generated because their underwriter can quickly plug in those numbers. Thus, faster approvals.

2. There's no way a broker can compete in today's market if he's not investing in saving his most precious asset; time.

3. Merchants are happy to go to complete Decision Logic if you give them a choice; "you can send in your last 4 months bank statements, or I can get you offers in a couple hours if we are able to log into your bank." All funders do a bank verification before funding so with repeat customers this tends to work exceedingly well.

Color me confused, but are you a broker or lead seller? In other threads where you promoted your "full package" leads for sale you indicated that you had no interest in chasing stips, dealing with merchants or selling deals, but your comments above speak to brokering deals. If you're doing both (brokering and selling "leads") how would you expect any potential buyer to have faith in the leads you're providing since it would appear that you are actually brokering the "fundable" deals and selling the leftovers.

[Triton]

But, a better idea would be for all brokers to get serious and start pulling decision logic within that first 10 minutes.

That's what we do. Saves a lot of headache and time.