Credit Pulls – Inquiries

The holiday shopping season is upon us and it’s shaping up to be an improved consumer spend over the prior holiday season which was a banner one.   With the job market still showing strong signs and wages with it, the X factor, consumers will spend more money this holiday season with Credit Pulls.

 

Many shoppers have the financial capability to make their purchases on the spot whether across the counter or online.  They have the credit available via cards or cash/debit in their checking accounts.  Yet a percentage do not have either and need to open a consumer finance account.  While a few jewelry retailers offer in-store financing most do not, alternatively they offer third-party financing.

 

The jewelry industry trails well behind several other retail markets – automotive, appliances, furniture as examples whereby third-party consumer finance is streamlined.  The common occurrence seen within retail jewelry is a customer needs financing; the jeweler has 2-3 lenders.  The customer completes one application, jeweler submits it and declined, the process repeats with the second and third lenders.  While that takes time in itself, the negative impact is not immediately seen – multiple hard-hit inquiries to your customer’s credit bureaus.

 

The delivery method employed in the other noted retail markets mentioned is vastly more streamlined.  They have streamlined the consumer application process. One hard credit pull, with multiple lenders for automated decisioning.

 

Today there exist two different types of credit pulls – soft & hard.  The soft inquiries are from current lenders you have lines of credit/loans.  Those inquiries have little to no effect on your FICO score.   The hard inquiries result when a customer has their credit report pulled to review for the new credit card, loan, etc.   According to Experian, a hard inquiry typically “results in a 5 to 10-point drop” and according to MyFICO, the inquiry will remain on the bureau for two years.

 

Many stores offer consumer finance, but the application process is disjointed and presents hurdles for both the customer and jeweler.  Below are

 

  • Customers FICO score below 700, falls into a sub or deep sub-prime space dependent on how low FICO falls.
  • The jeweler has customers apply more than once if declined.
    • Each application consumes time for both jeweler and consumer
    • Creates a negative atmosphere
    • Multiple hard inquiries – an unknown consequence, each inquiry impacting consumer’s score by 5-10 points
    • Multiple inquiries on the same day create a financial risk for lenders

 

The best way as a jeweler to offer a consumer finance program is to have where the customer fills out one application.  Whether it’s in-store or online before coming in, they complete, submit and get decisioned.   What you need is a platform where several lenders are tied into and those lenders offer finance programs for the credit challenged known as sub-prime or deep sub-prime. The platform should have the ability to do one hard credit pull and then share the bureau data with lenders onboard. This helps the consumer with only one inquiry and creates a more seamless enrollment for them and you.

 

With the holiday season here, having the ability to handle payment acceptance in multiple methods will bottom line improve sales with Credit pulls.  You have reduced the ultimate barrier, how can I pay for it?

 

If you have further questions, please touch base with us.  We offer a range of payment acceptance solutions for jewelers, consumer finance being one.  Thank you.

 

By,

 

Joe Radest

 

Joe Radest started his career in card payments over 2 decades ago, working for the industry giant First Data. Since FDC, Joe has worked with other notable processors – TSYS, Global Payments, and Chase Paymentech. 

Over 9 years ago, Joe branched out on his own, by launching 1 Step Technologies.  Since that initial payment firm launch, Joe co-founded in two other FinTech firms – Payix Holdings & Fortress Payment Technologies.  He serves on two boards and resides in Atlanta with his family. He can be reached by phone at 770-731-0414 or by email at joe@1steptech.com.

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