ARE YOU FUNDABLE, OR DO YOU JUST HAVE A GOOD SCORE? MERRILL CHANDLER
As a result, anyone who wants to borrow money is obsessed with their credit score. The problem is borrowers
have been led to believe that their credit scores are the chief determining factor to getting approved for
credit—and it’s not true.
My intention in this article is to disclose some of the things I have learned over the last 25 years as a credit and
funding expert. Many of these "secrets" revolve around what I call “fundability.” Fundability is far more than a
credit score. Fundability is the composition and quality
of your entire financial situation as represented by
your credit “profile” such that a lender finds you
attractive and desirable enough to extend you credit.
As I have learned, fundability is measured by three
major factors: credit score, credit profile quality, and
underwriting criteria. Let’s take a look at each of one of
them.
There are certain fundamental aspects of credit scoring that ARE important. The first of these is that your credit
score, for it to be fundable, needs to be a FICO® credit score. Most borrowers are unaware of the difference
between a FICO® credit score and what I call FAKEO™ credit scores.
A FICO® credit score is a three digit score that is generated by filtering the data of one of the credit bureaus
through a specific algorithm created by Fair Issac Company (FICO®). FICO® scores fall into two categories:
the first is called an “unweighted” score and grades the raw data of your credit profile. This unweighted score is
the score that lenders and creditors provide as part of their credit card offers. However, this score (even though
it is a FICO® score) is NOT a score that is used by
lenders to evaluate your fundability.
The second category of FICO® scores is what is called
“industryspecific” scores. They are also know as
“weighted” scores, because they are weighted for the
particular industry where you are applying for credit. For
example, if you're looking to purchase a vehicle, the
lender or dealership will be using FICO® software that
weighs your previous auto loan reputation. If you have a good payment history, your score will be higher than
your unweighted scores, but if you had a missed payment or repossession, then your auto score may be lower
than your unweighted score. Industryspecific credit scores include auto scores, mortgage scores, credit card
scores, etc.