Soft FICO Hits the E-Dealer Market
There is a new product on the market that will allow a dealer to find out what a prospect's credit score is without the formality of having them fill out an application or even having to give the dealership their SSN or date of birth. In fact the prospect doesn't even need to know that the dealer has pulled this little piece on information out of the sky.
The product is called a “Soft FICO”.
Here is how the process works. The dealership collects the prospect's first and last name along with their home address. This can be done via an Internet lead or over the phone once the dealer receives the lead and contacts the prospect. Once this information is collected it is entered into a web based interface and presto out comes the prospect's credit score. As interesting and potentially useful as this can be, there are a couple of hoops a dealer has to jump through in the process.
To begin with, if the prospect's credit score is not high enough (this is set by the dealer) then no score will show up for the prospect. Now this could mean two things. It could mean that the prospect's score did not meet the dealer's minimum or it could mean that the address associated with the prospect is false or is to new too register with the credit bureaus.
If the prospect's credit score does in fact appear then the prospect must “by law” be sent an official offer of credit via Snail Mail. This however is not done by the dealer but rather is done by the company that provides the service to the dealer. More specifically it is done by a lender that partners with the company that provides the service to the dealer. This is what makes the whole process legal according the “Fair Credit Reporting Act”.
The good news is that the offer is sent out in the dealer's name and the dealer is in no way obligated to use the lender partner in question for providing credit. Also the dealership make the prospect hold to variables such as down payment so that if a dealer needs 90% down in order to make the loan they have that option.
As we look at incorporating this technology into the back-end of our dealer sites I see at the need for proper training and implementation onto the dealer's selling system. For example, the last thing you want is a sales person giving off the impression that they know the customer has less than perfect credit and therefore is being treated differently as a result. Customers may not find it to exciting to discover that the dealership has in some way found out information pertaining to their credit without their permission. The argument is, however, that it is perfectly legal for a dealership to enter a prospect's information into the system for the purpose of offering them credit through a Soft FICO system. After all, credit card companies do it all the time. The only difference is their prospects are not standing in front of them while they do it.
After reviewing this technology for some time and comparing it against some of the psychosocial data we have researched on Internet prospects (and more specifically Internet finance prospects) I have come to the conclusion that the approach taken with the prospect will make all the difference. In the chapter of my book (Mastering The Art of Selling Cars Online) that covers Sub-Prime and the Internet, we take a look at how an individual who is filling out an application for credit associates it in their minds with any previous negative experience they have had on the subject of money or more specifically “credit”. One of the key techniques we discuss is how to cause an individual not to “associate” their current application for credit with their past memories of going “out ethics” on the subject of money.
The Soft FICO technology I believe will be a great tool for accomplishing this especially for Internet prospects that have yet to meet us in person. With an Internet prospect, we have the time (once we discover their credit score) to put on our game faces and prepare ourselves for the rest of the sales cycle accordingly. The questions dealers will need to answer surrounding this technology will be:
Does it fit into the dealership's sales process or system?
Can a dealership trust it's staff to not short cut the sales process?
Is the dealership willing invest the time to restructure bruised credit sales processes if needed?
One of the most difficult things new car dealers report about dealing with sub-prime prospects is the fact that when a new car dealership greets a customer on a new BMW they typically do not feel comfortable telling them that they need to “App Up” prior to driving a vehicle. This is just not the way we handle customers looking to buy a $70,000.00 vehicle. However with the ability to run a Soft FICO on a prospect we no longer have this barrier to entry.
I find this concept very interesting and I invite you to give me your feedback regarding the potential positives and negatives of this technology. We have been working on integrating this product into our dealer client websites and are very near a launch point. As such, I would appreciate and welcome your feedback.
Eddie Coleman
C.E.O.
Hyperdrive Technologies Inc.
www.MasteringTheArt.com
eddie@pccarbuyer.com
503.227.3515 ext107 |
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