Understanding the Funding Game Players—and Changing the Paradigm as a Real Estate Professional

by | Mar 20, 2024 | Article, Funding

If you are going to master the Funding Game, you have to know who it is you’re playing with.

The truth is funding is a game—one with the highest of stakes and where survival is paramount. Among the three crucial survival strategies lenders use to safeguard their interests, one particular strategy rises above the rest: the art of diversion. Lenders skillfully guide you, the borrower, and your attention away from the genuine metrics in play, entangling your focus within the intricate web of credit scores rather than the meaningful metrics that help you win.

Meet The Players

If you aim to master the Funding Game, you must first master the ability to spot the distractions. Then you must understand the key players and their roles in the credit system.

Borrowers. Borrowers are central to the credit system. The entire financial system relies on borrowers actively engaging in borrowing. However, many borrowers are unaware of their pivotal role, often feeling at the mercy of other players. This is you.

Lenders. Lenders, and institutions lending money, adhere to rules that have been in place for more than 500 years—borrowing at low rates and lending the same money at higher rates. Becoming a professional borrower is essential to gaining respect and navigating the Funding Game successfully.

Credit Bureaus. Consumer reporting agencies, known as credit bureaus, collect and report borrower behavior, shaping their credit profiles over 90 years. Understanding their role is crucial to comprehending how your financial behavior is perceived.

FICO. Fair Issac Corporation (FICO), also known as “the evaluator,” has been assessing borrower fundability for more than 70 years. FICO interprets and scores your credit data, influencing lenders’ decisions.

The Game

The Funding Game involves a dynamic interaction among the players.

When a borrower applies, the lender seeks data and evaluation from the credit bureaus, incorporating FICO software to grade the borrower’s credit profile in real time.

Contrary to common belief, there isn’t a single static credit score. Multiple scores exist based on the FICO software used for evaluation.

Automatic underwriting, which takes 30 seconds to two minutes, follows. If your data align with lender guidelines, you are approved. Manual underwriting occurs if red flags are triggered.

Your credit score, although important, is only one of many factors for approval. Lenders prioritize credit behavior and performance data.

How the Game Is Played

When you borrow money, it’s like playing a game with the bank. Here’s how it works: When you ask the bank for a loan or line of credit, they check your borrower behavior history using FICO risk assessment software. This software looks at your borrower behaviors at that moment, not just your score.

Most people think the number they hear as their “credit score” is the most important thing, but that’s not true. Your credit score profile is actually the last priority after the software evaluates your identity profile, your financial profile, your banking profile and your credit behavior profile.

What’s really wild is that in as little as 30 seconds, using something called Automatic Approvals, the bank can determine how you’re treating money today and how you’ve treated it in the past. It can determine if you’re a good lending risk or a bad one—just like that. If there’s something that seems even a little off, the bank software might decide the bank needs to take a closer look, which is called manual underwriting. This is when a person, not a computer, looks at your borrower profile. When that happens, your approval or denial is at the mercy of the banker.

The Big Secret

Here’s the big secret: What the bank cares about most is not how high your credit is scored but rather how you behave with money. If the bank thinks you’re good with money, they’ll say yes, and they will give you that money. Then, they keep an eye on how you use that money and even tell others about it.

Your credit score is just a tiny part of the whole funding game. The most important thing is how you’re handling the money and whether your behavior indicates high risk or low risk. That’s what determines whether you get the money you need or not.

You can’t win the game if you don’t know the rules!

Categories | Article | Funding
  • Merrill Chandler

    Over 30 years ago, Merrill Chandler—a personal and business credit pioneer and co-founder of Lexington Credit Repair Law Firm—became dissatisfied with the ineffective results of credit repair. He discovered an insider secret that getting approved for personal or business credit did not rely on a credit score, but in fact, was the result of having “fundable” borrower behaviors. With the right strategies, a borrower could “optimize” their financial behaviors to become highly fundable increasing the frequency and amount of their credit approvals. He co-founded Get Fundable! to help real estate and business entrepreneurs nationwide to finally grow their businesses the way they want resulting in his students and clients becoming more FUNDABLE and getting over $250 MILLION IN FUNDINGS!

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