Continuing with our information on leasing: You may have realized by now that getting the most income is something that you must work at ó and that there is always room for improvement, no matter how satisfied you are with your leasing company.
We asked Global Finance & Leasing, one of the organizations profiled in the previous article, to give us some tips on changing the grade of a lease. See if these help you with your next lease application.
Step One: The Correct Information gets the Right Price!
The credit history of a prospective merchant is only as good as the information reported to the bureaus. If the bureau reports back no credit, or bad credit, then a merchant may receive a poor grade or even be rejected. What do you do when this happens?
The answer: Do your homework first. Before doing anything, check with your customer and see what kind of credit they have to report. Even in the instant-information age of 1999, the leasing company may be pulling their information from a credit bureau that does not specialize in your merchantís area or business type. Consequently, the clients hard-earned credit references may not show on the report. Credit bureaus vary widely on what they report based on where they are located and their expertise. Talk to your customer. If they have any credit history, ask the leasing company to pull credit at a secondary bureau. This can make all the difference between a "no credit" grade, and a "good credit" grade.
Second, check the spelling of your merchantís name, and verify his or her social security number. Many a credit bureau report is returned "file not found," or "no credit," due to a misspelled name or an inaccurate social security number .When youíre talking to the merchant, ask them to supply you with their correct legal name. Nicknames and partial names can lead to an inaccurate report. Supplying the correct name is an easy fix to a "no credit" situation for you and your leasing company.
Third, find out from your merchant how long they have been in business. Salespeople are notorious for guessing at this very important factor, and in doing so, making a decision for their client.
An office manager or desk person may have guessed at essential application information, and could be off by years, thus influencing a response by one or two grades. Be sure to ask not only how long the merchant has been in business at the location where the sale is being made, but also if they have other locations. A merchant that has been in the grocery business for ten years in a city that is adding a new location is graded differently than a new business. Leasing companies often reward established merchants with better grades.
Step Two: Right the Wrongs
A credit problem that lowers a grade or moves a merchant into the "not approved" category may be as simple as having one too many unpaid phone bills, a misplaced utility bill, or having temporarily forgotten a student loan payment. Merchants are human, after all, and can neglect a bill just like anyone else. This doesnít necessarily mean they pose a serious credit risk, but it does affect the scoring they receive from a leasing company. A simple call to the merchant may uncover that these bills have actually been paid. If not, then a gentle reminder may help. At Global Finance and Leasing, for instance, a copy of a paid phone bill, a letter from a paid creditor, or a cancelled check bringing a loan up to date is often all it takes to improve a credit at least one or more grades.
Step Three: Bring in Reinforcements
The last step, which is often overlooked by ISOs, is to somehow enhance the merchantís credit. We donít mean doing anything illegal, such as providing false information. Most leasing companies look at a clientís personal credit when approving a lease. But letís be honest, not everybody has great credit. Surprisingly, you will find that there are partners and owners, and even officers of the company, who just wonít pay his or her bills. (Of course, this is always the person who feels responsible for filling out the credit application, and the person whose credit is reviewed for the lease.) The result is a poor credit grade or a reject.
Even in this gloomiest of circumstances, the situation can be readily fixed. Find a co-buyer or a co-lessee. A co-buyer is an individual with better credit than your original submittal, and that is willing to sign and personally guarantee the lease. In a family-owned business this may be a parent, or a sibling who has a vested interest in the business and better credit. In a partnership, one of the partners may have a stronger credit situation than the other. In other businesses, a joint owner, an investor, a senior officer, or anyone that will benefit from the success of the business may be added to improve the credit rating.
Working with a flexible leasing company that understands your business will improve your merchantís chance for approval at the very highest grade possible. All three steps can help an ISO receive a better grade and, as a result, a better payout from the leasing companies. Global Finance & Leasing, Inc. has been providing their "personal touch" service, working hand in hand with vendors and their merchants, for over ten years to get the most out of their sale. Global is also a part of the Fidelity National Financial family of companies, which means they have excellent financial strength and staying power.
We wish to acknowledge our appreciation to Global Finance & Leasing, Inc., for their efforts in the development of these tips. If you would like to know more about Global, or have questions about these tips, please call (800) 638-0332.
