By Tom Gazaway
There’s always more to learn, no matter who you are and what you do. Occasionally, I walk through the application and funding process with one of our competitors. It allows me to see where we do things differently and better than they do and, on occasion, we learn something that we adopt into how we work.
So here’s my latest story of doing this.
A large competitor of ours provides unsecured business lines of credit (as do we at HawkEye). We’re currently going through their pre-qualification process. Our borrower has 720-730 FICO’s and the only real issue we expected to have them bring up is utilization – the credit report shows she has about $37,000 in “revolving” credit card debt. Of course, I know something about that $37,000 that makes it very deceiving, but I left things as they are to see how they evaluate this and how they advise us to deal with the situation.
So we start the pre-qual and the first red flag goes up when the ONLY credit report they need us to set up for our borrower is with creditchecktotal.com. Now, nothing against the good folks at creditchecktotal.com (which is owned by Experian), but CCT (as I’ll call Credit Check Total) does not use a FICO-based credit scoring platform…so they don’t know the FICO score as you start the process with them.
I do want to say at this point that this “red flag” of their not utilizing FICO scores in the pre-qual process is not a complete deal breaker, but it’s definitely something to note. It’s pretty well-known that FICO scores are facing a pretty serious challenge from VantageScore, but CCT is NOT using a VantageScore, either. So even if you think of VantageScore as a serious contender to the title of “Credit Scoring Big Dog,” this credit screening site doesn’t really add up.
So here’s what happens next. We submit our report to CCT for them to review. Our “rep” is a very nice gentleman. He certainly doesn’t strike me as highly knowledgeable and he doesn’t overwhelm me with any insight but, hey, sometimes sales is just a numbers game right? Talk to enough people and the sales will come…maybe it’s like the old theory that you have to kiss a lot of frogs to find your prince!
Anyway, he forwards our information to the underwriter. At least we’re getting somewhere now. The underwriter comes back and says that we need to pay down over $19,000 in credit card balances! She offers that some of this paydown could be with other credit cards, but that some of it would need to come out of pocket.
So here’s an observation that she is missing: At this point, after reviewing the credit file in CCT, she does not know that over $23,000 of the total debt is NOT the borrower’s. This is another one of the flaws of CCT — it does not identify Authorized User accounts or tradelines. So she cannot see that these accounts need to be treated differently than the other revolving accounts and tradelines.
This is where we’re at right now, so stay tuned for the rest of the story. There’s a few things here that don’t look so good, but let’s see how the rest of the story goes before we draw any conclusions.
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Photo via Flickr user somegeekintn
By Tom Gazaway