Using Soft Credit Checks to Increase Sales and Efficiency

This blog post discusses how companies are saving time, money, and other resources spent on unqualified leads by running a soft credit check on potential customers early on in the sales cycle.
Dan Daniel

You just got a new lead and are excited about your newest prospect. What you don’t know is that you are going to spend a bunch of time and money on this prospect and their FICO score is 526, they have a recent bankruptcy, and their credit cards are maxed out and 60 past due. Daammmmmmn.......

You aren’t going to find that out until you submit the deal and your finance department comes back and tells you your potential customer’s credit is shot and this deal is going to be a NO GO (emphasis added). Has this ever happened to you or your team member? If so, may it never happen again!

This blog post discusses how companies are saving time, money, and other resources spent on unqualified leads by running a soft credit check on potential customers early on in the sales cycle.

What is a soft pull?

A soft pull is a credit inquiry that occurs when a company pulls a potential customer's credit report for informational purposes (such as pre-qualifying a potential customer for residential solar); not to make a final lending decision. A soft pull is typically done at the beginning of a sales process when a company wants to identify the creditworthiness of their potential customer.

Two qualities of all soft credit checks:

  1. A soft pull doesn't hurt the customer’s credit score
  2. An inquiry isn't placed of the customer’s credit file

Do I need consent for a soft pull credit check?

There are two types of soft pulls:

  1. Pre-Qualification Soft Pulls - Consent Required [TOPIC OF THIS ARTICLE]
  2. Pre-Screen Soft Pulls - Consent Not Required

****Pre-Screen Soft Pulls:  If you have ever received a credit card offer in the mail for some ridiculous credit card rate, you had a pre-screen soft pull run on you without your consent. This is called a batch pre-screen soft pull and is used in direct mailing campaigns. We will have another blog posted shortly reviewing how companies are using pre-screen soft pulls to obtain more customers (Spoiler Alert: by direct mailing home owners in a specific zip code limiting the mailer to people with a specific FICO Score). For now, let's stick to what you want know: how to pull your customer’s credit report with a soft pull credit check.

What information is on a pre-qual soft credit check?

A pre-qualification soft credit check contains the entire credit report and credit score. It contains the exact same information that is on a hard pull, it's just a soft pull.

More specifically, a pre-qualification soft credit check contains mortgage, credit card, student loan, and other revolving accounts. A pre-qualification soft credit check contains civil judgments, bankruptcies, warning messages, employment, and housing information.  It can also pull your choice of FICO Score or Vantage Score.  

What’s the difference between a hard and soft pull?

To answer the is question, it's best to consider the intent of the customer and company pulling the credit report.                                                                                                                                  

A soft pull occurs when a company is pulling the customer’s credit report and score for informational purposes. Ask yourself these questions:  Are you pulling your customer’s credit to prequalify them? To learn about them and their credit profile? Are you pulling their credit so you can identify whether or not you want to dedicate resources on them? If you answer yes to these questions, you want a soft pull,                                                                                                                                

A hard pull occurs when a customer is definitively asking for a loan, lease, or other type of credit line.                                                                                                                              

Additionally, there are differences in compliance work. For example, if you are going to give a firm offer of credit, you are going to need to give your client a pricing notice describing to them their rate and pricing is based on their credit report and score, not because of their race, creed, gender, ethnicity, etc. To learn more about this, feel free to check out the FCRA. Also, a hard pull will affect your customer’s credit by lowering their score a few points and putting an inquiry on their report. A soft pull does not.

How companies use pre-qual soft pulls to increase efficiency

Typically, our solar customers integrate soft pulls with their natural flow of business. Moreover, since a “Prequal” requires the consumer’s consent, our customers try to grab their customer's consent at their earliest possible touch point. After all, the earlier in the sales cycle you can identify the credit worthiness, the earlier you can present accurate terms to the client or disqualify them (which reminds me - that is another benefit of a soft pull. You can accurately present terms to a client early on in the sales cycle because you have a 100% accurate appraisal of their credit report and score. By having an accurate appraisal of their credit, you can provide more value and get more deals... Sorry, I digress).

Our customers are mainly getting consent either on the phone, in the field, or online.

1. Phone sales team / appointment setters

While on the phone, a simple verbal authorization to run a soft credit check is sufficient to pull your customer's credit report and credit score. The only requirement is the phone call must be recorded. After getting consent and pulling your customer’s credit, you can bucket them and treat them accordingly.

2. Reps in the field/door knockers

Additionally, authorization to run a soft credit check can be given by your customer on a tradition paper application or through your company website. Therefore, when your rep is talking with a prospective buyer, they can get consent on their smart phone, tablet, or in your ordinary business paperwork. Among others, the benefits of capturing consent on your website are 1. we record their consent indefinitely, and 2. you can get real time report access and underwriting integrated to your website through our API (call us for more info in this 760-672-5242).

3. Digital marketers (my personal favorite)

Irrespective of your marketing method (Google PPC, Facebook, Email, Social Media, Etc), when you drive your visitors to your website’s landing page you can capture their entire credit report and FICO score with a lead form submission. Because it's not a hard pull, all you need to capture is your visitor’s name and address only. Your conversions will increase since you are not asking for a full credit application with employment and housing information, let alone sensitive information like date of birth or social security number! If this interests you, you may want to learn more about our custom APIs for real time decisioning

I hope this was informative! Additionally, though we only touched on it briefly in the blog, ACS can set your company up with a full custom API that enables you to do whatever programing you want on your end. We have full API documentation and a developer sandbox.

If you would like more information on how your company can get set up with soft credit checks, give us a call at 760-579-6171.

Summary of Article

  • You will save time and money using soft credit checks because you will not be wasting time on prospects that have bad credit.
  • Your clients are going to be willing to let you run a soft credit check because you do not need their social security number to run a soft pull and it will not affect their score.
  • When your clients ask you about financing, you will be able to give them exact rates because you will know their exact score after doing a soft pull
  • You will receive your customers' entire credit report and credit score from a soft credit check.
  • You can pull your prospect's entire credit report and FICO score using their name and address only with a soft pull. You do not need their social security number or date of birth to do a soft pull.
  • A soft pull will not hurt your customer's credit scores because it is not a hard pull.  An inquiry will not be place in your customers' credit report and a soft pull will not hurt their credit score. Not even a little.
  • With a soft pull, you can pull your client's credit over the phone, on your website, or off a traditional paper application.

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