AYF 4 | Optimizing Personal Credit Profile

 

In Aesop’s fable, the golden goose lays the golden eggs. However, the vast majority of us have spent most of our time cooking the goose. This metaphor applies to your personal credit profile and how lenders measure it to see how you treat other people’s money. In today’s show, Merrill Chandler and Brad Burnett talk about how optimizing your personal credit profile to fit business lender guidelines will transform it into a business funding machine. After all, with renewable resource – these eggs that keep coming out of the same hens for years – so do business lines of credit.

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Are You F*able?: How To Make Your Personal Profile A Business Funding Machine

I’m here with Brad Burnett, my partner, Chief Funding Officer and Chief Marketing OfficerWelcome back to our show. 

Thanks. I’m excited to be here because for this episode, we’re going to talk about how to make your personal profile a business funding machine, the goose that lays the golden eggs. 

Let’s talk about Aesop’s fable, how the golden goose lays those eggs because the vast majority of us have spent most of our time cooking the goose. What I mean by that, it’s the metaphor because we talked about funding machines and geese that laid golden eggs, but what we’re talking about is your personal borrower profile. The credit profile and how the lenders measure with 40 different measurements those profiles to see how you treat other people’s money. How you treat with deference and respect the money that exact criterion to you on your personal side. Business lenders use those exact criteria to establish whether or not they want to lend to in the business. They amp it up to give you some more powerful metrics to meet. 

Interestingly, we’ve been taught our whole lives to cook the goose that lays the golden eggs instead of harvesting eggs for the rest of our lives. When I was a kid, I spent my summers out in my grandparents’ ranch and they had chicken coops. From eight years old to fourteen years old, one of the first things I did in the mornings was to go get these eggs. The bottom line is that it was renewable resource. These eggs kept coming out of the same hens for yearsso does business lines of credit. As we’ve talked to in previous episodes, these are renewable resources. How do we create these golden eggs and not cook our goose? 

I want to bring something up because the faithful that has been following us or binged our podcast know that 80% of a small business and entrepreneurial businesses approval is going to come from their personal profile and not only come from it, but a qualified personal profile. If you’re for the first time joining us and it’s the first time you’ve heard that, what I shared is the key to your being fundable and having all the money you need to do the deals you want to do or build a business or have the capital to grow your business, whatever it is you’re looking to do or invest in business. We talked about this in another episode. One of our clients was approved through his lender for a business purchase, so they got started. It’s not just about getting a business line of credit but as Merrill says, “You’re the person that’s going to backstop the approval unless you’ve been doing $10 million plus a year for several years. 

You have a Standard & Poor’s credit rating, the big boy credit rating. You still need a credit rating. It’s just Standard & Poor’s. Until you’re playing that level, you got to personally backstop every credit instrument, every loan line of credit that you’re ever going to engage. 

Honestly, we can thank the mortgage meltdown for that. Pre-2008 is not the same ballgame. Post-2008 is a new ballgame. That’s why it’s important for you to know how to not cook your golden goose or for metaphor number three, how to not step on the landmines that are going to blow up your goose. 

Funding Secret #3: Optimizing your personal credit profile to fit business lender guidelines will transform it into a business funding machine. Click To Tweet

The goose now is crossing the minefield. Stop killing your golden goose by blindfolding it and sending it off through the minefield. Brad is hitting the nail on the head here because of your personal profile and all of the metrics, FICO measures 40 characteristics of your credit profile. Here’s the thing, we call them the FICO 40FICO would probably chain me for using it, “You’re trademarking a trademark, which we’re not doing. We call it FICO 40 simply because we want to make it easy for you to understand, and we could get so technical with this. There are thirteen scorecards, five for positive and eight for negative in how they mix up and evaluate and weight these different 40 characteristics. 

Since you said it, the scorecard is a risk analytic that that allows the client of FICO to evaluate their risks, what your risk to them is. It’s the risk you present to them as a borrower if they lend you money. What does that risk mean? What’s the likelihood of them getting paid back? This whole concept, I am about to dance into the weeds. I’m supposed to be the guy that keeps us on track. It’s not just thirteen scorecards. There are different scoring software. The risk analytics that goes behind a single loan approval are incredibleTo keep bringing everything back together, if this first time, you need to go read our other episodes. 

We’re breathing rarefied air at this point. 

If you don’t know the rules to this game, you can’t win. The bottom line can’t win because Merrill likes to talk about basketball. I know when I hear FICO, when I first heard FICOjust thought of my score. I thought there was a score. It’s not a real thing. 

It never has been. Our score is based on this amalgamation. I’m going to use some big words, $0.25 words. It’s the collective of these 40 characteristics that are being measured. Every single one of them canto use the basketball metaphor, bench you. You can have too much available credit. You can have too many inquiries, I’m not going to fill these all 40, but you can have all these innumerable ways that they’re going to say no if it’s not balanced and intelligently crafted. We’re talking literally a crafted personal credit profile. The whole point of this episode is that when you know the rules of this game, you can convert your personal profile into a funding machine, a goose that lays golden eggs forever.  

These are lifetime plays. We show you how fundability will build long-term relationships with banks where you keep telling that bank, not only, “Give me more money, you can trust me with it,” but they raise the limits automatically. Go back to the previous episodes. We slayed in there explaining the automatic limit increases. Without knowing these rules, it’s going to be hard and fast no. There are 40 different ways to get shut down on any of your loan application. You think you’re filling out an app and they’re like, “Let’s look at all 40 reasons in this application to say yes or no,” when they review your profile. 

I think that’s a good place to bring up. When we talk with almost anyone who is new to fundability, new to being fundable, being a funding hacker, one of the first things they say is“Let’s talk about what your fundability looks like. Almost to a person, I pay my bills on time, comes out of their mouth at some point in that conversation. 

The storyline is we speak at real estate investment conferences and the business conferences all over the country. What we’ve come to, when we’re working at the booth, after we stepped down from the stage, people come up to us and say, “What’s this whole Funding Hacker thing? I’ve got an 800 plus credit profile. That’s the first delusion. 

Most of them don’t say profile. Most of them say, “I have an 800plus score. 

AYF 4 | Optimizing Personal Credit Profile

Optimizing Personal Credit Profile: The scorecard is a risk analytics that allows the client of FICO to evaluate the risks you present to them as a borrower if they lend you money.

 

I have an 800 plus credit score,” and it’s not a FICO score, it’s a FAKO score. 

If you have an 800 on your Credit Karma, congratulations. We’re going to talk about that later. Credit Karma, I’ve said it before, they’re the great deceiver. That’s a nice way of putting it. That’s an hour episode by itself. 

We ended up coming down from the stage and people are talking to us and they were like, “What’s this whole Funding Hacker thing? I’ve got an 800 plus credit score. Why do I need you guys? I don’t need any of this stuff. I ask them, “Do you know why you have an 800 plus credit score? They’re like, “Because I pay my bills on time. I’m like, “That’s one of 40 things that FICO measures. How are you doing on the other 39? You know them. They’re like, “No. I’m like, “Then you have no freaking clue why you have an 800 plus credit score and where’s your million dollars in business lines of credit that should come with an 800deliberately crafted profile?” All of a sudden, they’re sidedrooling. We know those FICO 40, we know those answers and yes, I credit shame. Forgive me. I asked for forgiveness for all my other people because the ignorance and the delusions are getting under my skin a little bit. I am human. Most people wouldn’t agree. They hold me as a credit god, but it’s not true. The bottom line is in most rooms that I go into, I know more about a consumer and business credit than the vast majority of people in that room, generally speaking. 

I will 100% back that statement. 

Except when I walk into FICO, then I am literally the lowliest, stupidest credit person in the room and I love it because that’s where we go. That’s where we learn everything that we need so we can come up here. Forgive my ignorance and arrogance. It’s that sometimes I get tired of people who innocently think they know what they’re doing. I only take them on when they believe to their dying breath that they know what they’re talking about. 

I’m going to drop a ladder down, because you are the most gracious and most patient person that I’ve met when dealing with the scenario. You say you get tiredI want to challenge it to the degree that it’s not to get tired of, it’s that they dig their heels in and want to argue with you that, No, it’s this thing. I pay my bills on time. That’s like playing high school ball. You’re not even going to make it to the arena. You’re still in high school ball. It’s not that you get tired of the people. I think people have been ingrained in what the bureaus and the marketing of the bureaus have taught them. If you think about it, you’re not the credit bureaus customer, you’re their data point. They’re information repositories and their customers are lenders. 

On the opposite side of the world here, FICO’s customers are lenders. Here’s the difference. FICO has a completely different business model than the bureaus do. The bureaus want to cast this wide net and they want to capture all your informationThey want to capture information that is not even you. It’s maybe youIf you don’t think this stuff happens, I have somebody in Illinois that every couple of years they pop onto my credit and thank the credit gods. They are good with their credit because otherwise they’re making a mistake in their data collection, the bureaus, they capture this guy’s information. If he didn’t pay his bills, it would affect me. That’s the credit bureau. They got this big wide net and they’re going to capture all that information. FICO wants the most clear and succinct information possible because they score it and they score it so they can tell their customer, the lenders what your risk is. 

If you don't know the rules to this game, you can't win. Click To Tweet

That’s a perfect analysis of this process. I am not tired of working with the people out in the public because the whole point of us doing these podcasts is to empower and inspire you. I’ve totally believed that it doesn’t have to be this way. It’s the people who want to fight with literally the facts that are like, “What FICO 40? I’m like, “Okay.”  

On that note, creating a business funding machinewhat are the things that have to be in play to have that business funding machine? I’ve got to have the FICO 40I’ve got to do all of these things. Honestly, I think Merrill, you should do a show on each of the FICO 40 at some point where it’s about that.  

Where every single one, some of them may be ten minutes long, some may be 30. We’re going to send our clients to these podcasts so they can refresh all because we’ve given them literally, I think it’s hundreds now of video training tools. This is a succinct movement through the technology and we’ve never given them all FICO 40. 

I would be careful saying that because we might jump around when something like PAYDEX raises its ugly head seventeen times. It is clear and succinct, but a point would be that our clients have trusted us to take care of them. We haven’t had to dive into the detail that we are now because we are giving this to all of the worldsIf you got every piece of what we teach and do for our clients, it’s going to take you a minute. I don’t know how long it’s going to take, but it’s going to be a minute because we’re not going to be able to handle it in the same way. If you want to learn this stuff faster, we talked about it all the time. You know we’re a business. We have a boot camp. You can come to the boot camp, go to FundingHackers.com and check it out. That’s not what this podcast is about. This podcast is about being able to put you in a position where you have that actionable Intel with a funding machine as a profile.  

Those FICO 40 are the first criteria to turn your personal profile into the funding machine. You got to know what’s being measured and then align yourself. We don’t have the graphics here, but in other videos and podcast, we’ll cover it, but there’s a slide of FICO marketing its website, marketing to lenders. The very thing that they’re telling the lenders about is our software, our small business scoring service software is going to measure the FICO 40 and it’s going to then link up with what they call internal performance data. That’s the fancy language for their records on you. The date you pay, that amount you have, the utilization you have. Do you realize they know your utilization every single day? It’s part of what’s called a 24-month look-back period. 

Every single piece of data, the breadcrumbs you leave when you have a credit card, a credit line, installment loan, a mortgage or auto, all of those, you are leaving breadcrumbs. They’re tracking all of that data and they call it internal performance data. That’s how they monitor what we call those automatic limit increases. You get free money without an inquiry because they’re measuring you and your daily performance across 24 months. I am not aware. I’m open to it, you let us know at the website, but I’m not aware of the automatic limit increase before 24 months. I’m open that it’s possible. 

For business or an individual? 

AYF 4 | Optimizing Personal Credit Profile

Optimizing Personal Credit Profile: The FICO 40 are the first criteria to turn your personal profile into a funding machine.

 

It’s for an individual. The reason why I’m sharing this with you is I’m still practicing what I preach, but the way I have made my business be a funding machine was by aligning and creating everything necessary in my personal credit profile. I’m embarrassed to even say this, but because there was a slight to massive fail in my application process where I stepped on a landmine. The loan officer that was filling out the application for me, filling it all in, foolishly, I did not take a look and review the application before they submit it because they printed out, “Is this correct?” I just signed it and sent it in because I told them all the things that I needed to tell them. The point is that I’m telling him specific data, spelling out names and addresses, aligning my personal credit identity perfectly, all of the things that I need to do. That’s what makes my personal profile, my personal information, funding machine. 

I did not review that application and I get a call later that afternoon saying, “You are conditionally approved for a line of credit. 

Conditional approval is embarrassing to me because I’m leading this charge. I’m like, “What do you mean conditional approval? That means I’m getting kicked out from automatic underwriting into manual underwriting and we have to have a human being now getting involved. They’re pissed and less profitable, but I’m embarrassed because this is my game. Do you know what happened? The gentleman who was completing the application, in the personal identity field for my personal address, copied my business address. It’s a red flagIf your business address and your personal address are identical, in this case, I got kicked into manual underwriting. If you don’t have the experience that I have, you might get denied out of hand. 

I take my credit advisor with me who happens to be our other partner, Jessica, and I go into this and I’m befuddled. I’m like, “No, here’s the correct one. I pulled up my FICO credit report. I look at it all, No, my address is correct. They put it in and they approved me. Jessica goes in and reviews my application and it was wrong on the application that I signed but didn’t review. It’s a huge mistake. I told him verbally. I did not put it in myself and then I didn’t review it before I signed it. It’s a massive landmine. The thing is you don’t even know what to check for when you’re filling out your applications. That’s why when you know the rules of this game, you know how to hack and navigate through these waters. Your profile, like mine is another $75,000 but I had to go through manual underwriting. Please forgive me all my clients and all my students because that’s a cautionary tale for me to not get arrogant, which sometimes I can, but I failed. Thankfully I had enough juice in my personal profile that the funding machine only clicked. It glitched and I was able to save it. 

That’s a brilliant share. Thanks for your honesty. That’s very raw. I want to bring up one thing about that though, the why. They had the same address. He copied and pasted. Again, go back and just think about what this automatic underwriting system is designed to do. It is designed to protect the bank’s money. What are they trying to protect it from the most right now? Fraud, absolutely. It’s rampant in the United States. 

They look at every data point. You don’t even understand. I’m Merrill Chandler, Merrill Ray Chandler, Merrill R. Chandlerbefore I knew what I was doing. Each one of those are different data points that will get me kicked out of underwriting because they don’t know which data point set they’re lending their money to. That’s why the funding machine got a glitch because this data point, when they look at my credit bureau and they see my real residence address and then they look at the application, that’s a no for many or most people. It kicked me and I end up in manual underwriting. 

One of the things that have been a tripping point or a massive landmine for a lot of people in the past is that it’s the same address as your business so it’s obvious that it’s linked to you. It’s obvious that it’s yours, but that’s not how automatic underwriting systems work. They look at it and go, “Is it the same? Yes or no?” 

The truth is actionable. Click To Tweet

The algorithm says, “It’s a perfect match.” It’s not street versus St. It’s a perfect match yes or perfect match no. They will deny you on non-perfect matches. If I Google my residence address and I just put 1925 South and nothing else, there are going to be 400 Google addresses that come up, 400 of them. The bottom line is the data point is what matter. It doesn’t matter if you think it’s important or not, don’t care. You’re going to get denied and you’re going to hit these landmines and blow up every time like you’ve been blowing up in the past. They matter. Street versus St matters to this underwriting software because fraud is the single greatest loss of lender dollars in the country. Not defaults, fraud.  

FICO has nailed the default model now with their business and personal scoring. They’ve created Falcon and there are a whole bunch of systems out there and we’ll go over those. Everybody’s got that. They call it an early warning system. There’s bank fraud going on here and each one of these, they’re going to have their own episode. There’s so much juice out here to be able to squeeze. Know whether you think it’s important. It’s important. Me having the same address should be no big deal. It’s related, but that’s a point of fraud. Why aren’t they using the true personal address?” 

What’s reflected in the bureau data, that’s the bottom lineThese automatic underwriting systems don’t have the discernibility to go, “Clearly Merrill R. and Merrill are the same people. They don’t have that discernibility. You have to be that dead on nails accurate. You got to be that accurate in all of your data. You have to be. 

There are 29 Merrill Chandlers in the credit bureau databases. That’s not a common name so you’ve got to dial in. We’re going to have probably two or three episodes on personal credit identity, building a bulletproof identity. That’s the only way. We can stop being having our data stolen because the more specific your data is, the less wiggle room that is because remember, the software‘s looking for Merrill, Merrill R., Merrill Ray. They’re looking for all of this. When we do it right, if it’s any variation off of the perfect personal credit identity that you craft, that they’ll deny anything that isn’t perfect. That’s great news for us protecting our identity and it’s great news for them. It’s great news for them because they’ll get to say no if it’s not a perfect match. Why our Funding Hackers revolution is taking hold is because it’s a win for lenders and for borrowers. 

You protect your identity from theft and they protect themselves from fraud from the same freaking data points. The way to make your personal profile a funding machine is by aligning all of your data, your revolving accounts, installment loans, and derogatory accounts. Do you realize it’s better to have three collections if they’re all identical across all three bureaus than to have one collection on one bureau and have deleted from the other bureaus? It’s another thing credit repair doesn’t account for. There are so many ways that FICO measures this data, all those scorecards, eight of them, eight different risk analyses depending on the type of negative credit you have. It’s a thing. 

To touch on, you referenced having the right revolving accounts. That’s going to be your credit cards. Anything that you use and pay off and use again, that’s going to be your revolving. Your installment loans, your automobile, your mortgages, if you have student loans, personal, big personal loansHere’s the other key and we talk about this in all of our episodes. You’ve got to have the right accounts. Not just have accounts and not just have them be equal on all the bureaus because you can have a perfectly reflected reporting profile and not have it be a fundable business profile. 

It’s a high-quality profile, a fundable profile. Chase is not going to give you $100,000 commercial loan on your Home Depot or Victoria Secret reputation. 

You’ve not only got to have it reporting accurately, have all the data points in play, but you’ve got to have the right ones. We’ll talk more about that. 

AYF 4 | Optimizing Personal Credit Profile

Optimizing Personal Credit Profile: Automatic underwriting systems don’t have the discernibility. You got to be accurate in all of your data.

 

We’re going to cover all this so keep bingeing. 

Merrill loves you to binge. Subscribe, download, share this with your friends and have an Are Your F*able watch party. 

This is way more applicable to your lives than even Game of Thrones was. Game of Thrones not only is over, but this is going to have far more episodes than Game of Thrones will ever have. 

I don’t ever want to get into that last final episode. We promise, our interest in what we’re doing will not wing. 

We’re not going to be attracted by some other project. This is the bottom lineWe love having you here. We’ll pick up the next episode but go to FundingHackers.com, get the lowdown on everything that we’re doing and what actionable intel, you’re going to hear me say those words foreverWe are giving you actionable intel because one of the Merrillisms that I love the most is the truth is actionable. We’re here to tell these, tell you how the game is played. What you do with it is your business. If you want a little bit more, go check out the boot camp. Go check out my book, FundingHackers.com/Book. Check out everything that we got because this is going to change your life. It’s already changed your life. If this is your fourth or fifth episode, you know if it’s changing in the undercurrents of how you are working and looking at your profile and your business. 

Go to CreditSense and or Funding Hackers on Facebook. Follow us, like us. We’ll do some Facebook Lives that’ll be a little different than the showWe appreciate all of the input, the feedback, the downloads, and the shares. Keep it up. We’ll keep it up and we will see you in the next episode. 

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