By Paul Machin
Without credit bureaus, it would be a challenge to complete most vehicle sales. The average American is not in a position to walk into a dealership and write a check for “payment in full” for that beautiful, shiny new car they have their hearts set on. For the most part, car loans, regardless of the terms, require the standard practice of acquiring a consumer credit report to make a determination of the consumer’s “worthiness”. Thus, utilizing credit reports and following compliances standards are a necessary business process. But did you know not every credit bureau is the same?
Even though credit reporting is a dealership commodity, there are still features and services you should be scrutinizing when choosing your credit compliance business partner. When dealers ask “what should I be looking for in a credit bureau company?” my response generally is engage with a company that offers more than just standard credit report services, but includes consulting and process evaluations as part of their standard business practices.
As reported on Edmunds.com, dealers struggle to meet the increasingly complex government demands for information about their consumers. Since 1989, FICO® has redeveloped its scoring models several times to ensure “they remain robust predictors of risk”. As consumer credit behaviors change, it’s necessary for the analytic technology to be adjusted for proper data reporting enhancements. With each new FICO scoring version, lenders migrate at different paces – some relatively quickly while others can take several years. Thus understanding which scoring model is best can be confusing. Work with a solution provider that will advise you on the changes and help you implement an upgrade path.
In addition to staying abreast of the various types of credit scores, dealers should have a plan in place to maximize the various finance options for properly assessing a customer’s rating score. Your solution provider should offer recommendations to safeguard your costs in order to benefit from greatest financial margins. Dealers should not be penalized for upgrading the newest FICO score, make a point to get clarity on your credit bureau’s policy for version upgrades; as well as over paying for credit and compliance reports which can become a costly annual expense.
Finally, work with solution provider that offers credit statement analysis. Your analysis should offer insight into expense reduction opportunities and leverage the lowest credit pull costs based on their buying power.
Don’t settle for status quo. Evaluate and question your credit and compliance providers in the same manner you would a CRM or DMS solution to ensure you are getting proper guidance and aren’t over spending. You’ll be glad you did.
Paul Machin | National Credit CenterAs NCC’s Area Vice President of National Sales, Paul Machin is responsible for managing NCC’s national field sales team. Paul oversees sales and distribution of NCC product offerings across multiple U.S. locations; Paul also has direct leadership of all Field Sales Directors and Key Account Executives. Paul is a seasoned automotive professional as he previous served as Director of Sales (East) at Dealertrack, Executive General Manager for a Nissan franchise dealership, launch team member with Saturn Automotive, as well as founding member of CarMax Greenville.