Getting fundable is more than just having a good credit score.
Lenders make the most money when they lend money, right?
Then why does it seem like they want to keep borrowers in the dark about how to qualify to borrow their money?
The reality is lenders wish you knew the foundational secrets of how to be a good borrower, but the “Illuminati”-level secrecy has been baked into the system because they haven’t trusted society not to abuse their processes. So, they threw us a bone about credit score to give the most basic level guidance on how to be a “good risk” as a borrower.
As a result, anyone who wants to borrow money is obsessed with their credit score. The problem is your credit scores are not the chief determining factor for getting credit approval.
Fundability is so much more than a credit score. Fundability is the composition and quality of your entire financial situation as represented by your multilayered borrower profile and behaviors. It is measured by five major factors known as your Fundability Score.
Let’s take a look at each of one of them.
The first factor is your identity profile. Your identity profile helps a lender determine which borrower they’re actually lending to. In the world of automatic underwriting, the actual borrower and their identification are not used in the approval process but rather as a search-string algorithm that lets them compare the information on an application with the information in the credit bureau databases. Think of your identity as the gatekeeper to your approvals. If you have numerous identities, then a lender may reject an application simply because they do not know who is actually applying for the money.
Your financial profile is the “10,000-foot” view of your ability to repay a loan or make payments on a credit line. Your financial profile includes your gross annual income, your total revolving and installment loan debt load, your total monthly payments, and your debt-payment-to-income ratio. Your financial profile lets a lender make reasonable assumptions about your income and expenses, as well as your assets and your liabilities. All those components speak to your financial stability.
Your banking profile measures how you treat your money. A lender can accurately measure your financial behaviors and have a good idea about how you will likely treat their money. Your banking profile includes your average monthly balance, your monthly deposits and withdrawals, the number of times you use your overdraft account, etc. A negative behavior pattern with any one of these items can adversely affect your fundability.
The fourth fundability factor measures your borrower behaviors as recorded on your credit profile. Your credit profile is the record of your balances on revolving accounts and installment loans, the traffic you charge on your revolving accounts (traffic is the number of times you swipe your credit card each month), your average utilization over time, whether or not you have any derogatory Items in your in your credit history (anything from a 30-day late charge to a charge off or bankruptcy), and what your inquiry load is and how frequently you’re looking for new credit.
The final fundability factor is your score profile. Lenders use several different credit scores for different purposes. There are scores specifically for credit card applications, automobile applications, home loans, insurance, renting an apartment, and so on. If you have optimized the first four fundability factors, your scoring profile will improve regardless of the scoring model being used, which in turn leads to higher funding approvals, lower interest rates, and quicker turnaround times in the application process.
Every borrower in this country and every individual in the upcoming generation needs to learn the truth about their Fundability Score. Become the borrowers lenders wish we could be and become trusted borrowing partners. It’s time to turn the tables and make yourself knowledgeable and fundable.