Three Tactics for Getting Better Credit Information on Your Customers

A condensed version of an article by BCR’s Jeff Dobbins for NEFA’s Newsline

By applying a few simple strategies at the start of a deal, you can reduce the time it takes to get loans approved by days while increasing your close rate.
Every deal hinges on getting complete and accurate credit information to evaluate a company’s ability to pay. Having a set approach on how and where to get this information will help you determine the appropriate financing and terms for the client, the appropriate credit bureau to use and whether the deal is even worth your time.

Here are three important steps to getting more good deals closed faster:

Have a thorough and complete credit application

Having as much information up front will save you phone calls later. Ask a lot of yes/no questions with a place to explain the response. People have no excuse for not answering a simple yes/no question and the answers give you the info you need from the start. This also helps establish the integrity of the person you are dealing with. For example, if you ask them if they have any other businesses and they check no, but later you find they do, you need to find out why they said no.

Some important things to ask for on your credit application include:

  • business names, including DBAs and past names
  • addresses, including physical, mailing, PO boxes, previous and owner’s home
  • years in business and number of employees
  • website address

Study the application and confirm the information on it.

Many people don’t take the time to thoroughly check the information on credit applications. Just 15-20 minutes on the computer with a credit app and Google can save you hours or days of extra work. Searching the company name can confirm many of the responses on the application. You can also see if the business has a bad rating or any complaints with the BBB or on review sites. Google Maps gives you satellite and street view pictures of business location, which lets you confirm the business is legitimate. Google will also tell you if the owner has used the same phone number for other businesses. Finally, the company’s website should validate the information on the application.

Pull the proper credit reports.

Credit bureaus and credit reports are not created equal. There is no “one size fits all” credit report. Every client and every deal will require something different to properly assess. There are big differences between the data that each of the three main business credit bureaus - D&B, Experian and Equifax - provide. The most appropriate credit report may come from one, two or all three. Private industry databases can be great sources for industry-specific information, but are usually best when used in conjunction with one of the three major business credit bureaus. Knowing which one or combination of bureaus to use can save you lots of time and money.

There is not a single “Holy Grail” credit report. When it comes to credit reports, it’s the value of the information it provides, not necessarily just the cost of the report. Buying the cheapest report you can find and/or relying on a single credit source for every deal can cost you a lot more in the long run.

For more information on what the three major credit bureaus provide, see our January 2014 article entitled, “You Need All Three Views for an Accurate Credit Picture.”

Remember these four R’s of gathering credit information: Research, Reports, Risk and Return. Research your clients, pulling the Reports that best help you analyze and reduce Risk, and you will have the best Return on your investments.

Access the full article in NEFA’s Newsline at
http://c.ymcdn.com/sites/www.nefassociation.org/resource/resmgr/Newsline/NEFA_Jan-Feb_14(1).pdf