The credit report check in the underwriting process for loan applications is an important step for lenders. It provides lenders with better foundations to make better loan decisions, helps reduce borrowers’ default risk, and improves collection efforts.
According to Zippia.com*, by April 2022, 33% of small business owners struggled with a lack of capital, which increased the need to ask for a loan and, with that, the number of applications lenders received overall. Because of this, it is very important for lending companies to rely on more innovative tools and loan software to filter the good applicants from the unqualified ones faster.
Why should you improve your credit reporting processes?
As alternative lenders become one of the major issuers of loans by the end of 2022**, having a faster and more accurate credit reporting process is critical, not only to verify the legitimacy of each applicant and make better credit decisions but also to open up more space for new applicants and gain a competitive edge over other small business lenders.
If you want to be on top of the game, wasting precious time with unqualified leads is not an option. More importantly, if your credit reporting isn’t accurate, you increase the risk of having borrowers defaulting on a loan and never getting your money back.
With the help of Salesforce, you can avoid this and work towards improving your credit reporting processes and accelerating your business growth. Let’s dive more into this and see how Salesforce can help.
Which credit reporting bureaus do lenders use?
Many lending businesses in the US turn to different consumer reporting agencies that collect and sell consumers’ credit data. But there are 3 credit bureaus that most lending companies go to when looking for accurate credit information about potential borrowers: Equifax, Experian, and TransUnion. Let’s see how they differentiate from each other.
This is one of the three largest consumer credit reporting agencies. It collects and provides approximately seven years of credit data on over 800 million individual consumers and more than 88 million businesses to creditors for a fee; additionally, it sells credit monitoring and fraud prevention services to consumers. A point for Equifax is the way it groups its accounts, making it easy to view current versus old credit data.
This credit reporting bureau operates in 37 countries and collects and provides information on over 1 billion people and businesses. More companies use Experian for credit reporting than they use Equifax, which means that it is most likely you’ll get more information from a loan applicant in this agency, but it doesn’t make Experian better than Equifax.
Additionally, Experian provides lenders with more than a score; it also includes every credit product or debt the potential borrower has applied for, giving lenders a more complete view of an applicant’s credit history.
It’s the smallest of the three largest credit bureaus. TransUnion collects and provides data on over one billion individual consumers in over 30 countries. It also offers other credit and fraud protection products to consumers.
What are the challenges?
Even though these three reporting companies offer almost the same information, a borrower’s credit score can be different in each of these reports because some lenders might report credits to one of the bureaus but not to the others resulting in some inconsistencies.
So, in order to have a more accurate and complete picture of the applicant’s credit history, you’ll need to get access to these 3 credit bureaus. Unfortunately, this can become a tedious and exhausting process prone to human error if you don’t have the right software to help you streamline the process and make credit reporting faster, easier, and smarter.
Benefits of using Salesforce to access your credit bureau reports
As we mentioned before, the process of getting and evaluating applicants’ credit reports can be very time-consuming without the right tools. If you use any other CRM instead of Salesforce or a standard loan origination system, this is how your process more or less looks like: you leave the platform to go to the credit bureau website, get access, run and download reports, analyze the results and then re-enter everything back into your system.
A very manual, slow, and painstaking process where you have to use multiple websites to pull the necessary data, and it’s often prone to costly human error.
However, if you use Salesforce to automate your business processes, you don’t have to manually do a borrower credit check. By integrating Salesforce with one or multiple credit bureaus, you can run credit reports on potential borrowers directly inside Salesforce, significantly improving the process.
Don’t need to worry if you don’t know how to or don’t have the resources to integrate these systems. The Salesforce AppExchange marketplace offers credit reporting tools, like Credit Hero, that connect Salesforce to Experian, Equifax, and TransUnion, helping lending businesses make more accurate and efficient decisions.
But not every app has the functionality to connect to the three bureaus. However, Credit Hero, by Cloudsquare, can help you with that. This credit reporting app streamlines the access to Experian and Factual Data, a 3rd party company provider of consumer reports that provides merged credit reports from Experian, Equifax, and TransUnion.
This means you have the option to run credit reports from one, or all three of the bureaus and access every essential data point they offer directly in Salesforce, boosting your business efficiency and productivity, reducing human errors, and decreasing time-to-decision.
Finally, by having your credit reporting process directly in Salesforce, you can stop switching between multiple sites and manually pasting information. Instead, have the data be automatically pulled and saved to your opportunities or contacts and parsed down to granular detail so you can create sophisticated business logic to automate the qualification process, upgrading your credit reporting process to a new level.
By integrating your credit check process with Salesforce and having a tool that is compatible with the three biggest Credit Reporting Agencies, you can level up your business underwriting and gain a competitive advantage over other small business lenders. Furthermore, your business will have more free time to access more applicants and reduce the time it takes to separate unqualified leads and make more assertive credit decisions.
Credit Hero by Cloudsquare is designed to help various companies across a wide range of financial industries. The app allows businesses to get access to a single or tri-merge credit report, it can pull individual and/or joint reports from each bureau, it’s cost-effective, provides data point mapping from bureaus to custom opportunity objects, and makes your credit report process quick, easy, and accessible for your company.
- * Jack Flynn. “Small Business Lending Statistics  Understanding How Lenders Approach Small Businesses” Zippia.com. Apr. 14, 2022, https://www.zippia.com/advice/small-business-lending-statistics/
- ** Donna Fuscaldo. “The Small Business Financing Trends of 2022” Businessnewsdaily.com. Aug. 30, 2022, https://www.businessnewsdaily.com/8703-current-state-small-business-financing.html/