Shoppers at Driver’s Village in Cicero, N.Y., don’t fear getting turned down when they reach the F&I office. The sales staff knows what the customers can afford before they start financing, and sometimes even before they enter the stores.
Driver’s Village began using 700Credit’s Web platform about a year ago, said Firas Makhlouf, the dealership group’s chief information officer. Through the platform, dealerships can prescreen customers without asking for sensitive information, such as a Social Security number or birth date.
“The barrier of entry for customers to give information has been lowered,” Makhlouf said.
700Credit, of Southfield, Mich., near Detroit, provides credit reports, prescreening and other services to dealerships.
With the prescreening, Makhlouf can use the customer’s name and address to get a credit score in what’s considered a “soft pull,” which doesn’t affect the customer’s credit profile. “From there we can go forward with a car deal,” he said.
Before or after arrival
Typically, Makhlouf’s 10 rooftops within the Driver’s Village dealership group receive 100 leads per month from 700Credit Web prescreens, when consumers visiting the group’s website enter their names and addresses, allowing the stores to conduct a soft pull. Alternatively, staffers can pull the approximate credit score after a shopper comes to one of the dealerships.
Ken Hill, managing director of 700Credit, says prescreening reduces the risk of customers choosing a vehicle they can’t afford.
“Nothing frustrates a consumer more than getting to the finance office and finding out that they can’t get approved for that automobile or that they can get financing but the interest rate is so high that they can’t afford it,” Hill said.
Of 700Credit’s 7,000-dealer client base, 65 to 70 percent are new-vehicle franchised dealers. The vendor is rolling out the program nationwide over the next three to four months. Two hundred dealerships have been using it for about a year. The company’s name dates to 2004 when a credit score of 700 or higher was widely considered “a prime deal,” Hill said.
Other companies also are developing ways to approximate a consumer’s credit score through a soft pull, including Dealer E-Process with CreditMiner and ProMax Unlimited with Instant Screen.
With a soft pull from a form filled out on the dealership website, the dealer doesn’t see a complete copy of the customer’s credit report, but sees a credit score and current auto-loan information, including interest rates and monthly payments on any current auto loans. The dealer also sees where customers are “in terms of auto loan, where it started, how many months left, how much they paid,” Hill said.
The credit score produced from the soft pull is “fairly accurate,” Makhlouf said, within five to 10 points of the customer’s credit score.
The soft pull doesn’t hurt a consumer’s credit score, and the dealer is still required to pull a full credit report before submitting a loan application to finance institutions, Hill said.
Matching shopper to car
It helps salespeople better align consumers with vehicles they can afford, he added, “so that they don’t find out that, based on the credit score, the car is a bad fit.”
For example, Makhlouf said, “If we have a customer that scores below the 600 threshold, we have to put that customer in a vehicle that can absorb that payment.”
“We try to find the right bank and the right vehicle” and consider the loan-to-value ratio with the payment-to-income ratio and credit score, he said.
“We can structure that deal based on the credit profile of that customer.”