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Welcome to CFF-U!

Matt Manero:

Welcome to CFF TV. I’m Matt Manero, president and founder of Commercial Fleet Financing in Dallas. We’re in the studio with Kindra Bierley one of our biggest success stories here at Commercial Fleet. For many years, Kindra is an absolute expert in the space of transportation equipment financing. So I wanted to get with you today because I want to help customers get a deeper understanding of their credit. What, and how we, as a finance company, look at their credit, why their credit matters and then what do they have to do to improve their credit? So, why don’t we just talk about the pain problem that we see, and that is that customers come to us looking for financing and they don’t know what their credit looks like.

What Your Credit May Look Like

Kindra Bierly:

Credit is such an enigma to so many people, they will say I have a seven 50 credit score and I’m like, yes, fantastic. We can help. And I opened their credit Bureau and I see four credit cards and I’m like, Hmm, but that’s okay in their eyes. Their credit is wonderful. And really, if you have a seven 50 credit score, that’s still not bad, but in the world of commercial finance, it takes just a little bit more in order to seal that deal. You have to have some form of installment rec records on your Bureau. Uh, you have to have good payment history, your credit card balances can’t be maxed out. You can’t have 10% available and expect to get a good term loan.

Matt Manero:

So let’s dig into that. What, let’s talk about specifics, what’s the lowest credit score you’ve seen recently in three hundreds. Okay. Did that person get financing? No. No. So, you know, and the highest that you’ve seen recently

Kindra Bierly:

Almost perfect, probably an 870 something. I could not believe that they actually exist.

Matt Manero:

Yeah. Yeah. So there are factors that go into building a person’s credit Bureau. You’re talking about trade lines. You’re talking about, um, amount of debt on those trade lines. Because to your previous example, you could have a 700 credit score, but you might only have two credit cards w each with a $500 limit and a zero balance. So you’ve paid it to zero, but technically your borrowing power is only a thousand dollars. Very, very true. But the system, the algorithm scores them very high and therefore they would answer the question that we would ask of how is your credit? And they would say, it’s amazing and they’re not wrong. That’s the point. They’re not.

Kindra Bierly:

Yes. So we take a hard look at all of that. We, we want to take a look and just see where your credit is and offer the best case scenarios. I mean, if you only have two credit cards, maybe instead of paying cash for your next car, how about financing? It, I mean, your scores high enough, there should be no reason why you couldn’t finance it at a very, very good rate. And so then you build up your installment payment history, and then your score goes up and it’s real. It’s not what we call a JC penny score.

Matt Manero:

That’s right. JC penny score means you have a JC penny credit card with a $500 limit. And you know, that’s all you got

Kindra Bierly:

And it’s perfect pay history. And the algorithm says, perfect pay history means higher credit score.

Why Credit Matters

Matt Manero:

Now let’s, let’s talk about, you know, why this matters because, you know, look, uh, Dave Ramsey, who, you know, I think has a lot of good tips for a lot of people would tell you your credit score doesn’t matter because you should be paying cash for everything. Yeah, it sounds good. But most people don’t have $150,000 to pay cash for a new Peterbilt.

Kindra Bierly:

No, they don’t. And I will say that, uh, as wonderful as that program is it’s, uh, it’s painful when it comes to commercial finance, because really we want to see what you’re up to. We want to make sure that you’re making your payments on time and not just the credit card payments, because if you have a thousand dollar limit, you’re going to pay $75 a month. That’s not telling us anything. We want to see your full story.

Matt Manero:

Yeah. The one, the one piece that is that, that misses in the Dave Ramsey theory is if you can borrow the money from us at say five, and your business makes 20% net profit margin, it wouldn’t be beneficial for you to pay cash for a truck because you’re leaving 15% of profit on the table, stuck in the trunk. The better play would be run a business that makes you 20% profit margin, borrow the money from us from five and keep the cash and make the 15% profit margin without using your money. It’s it’s other people’s money.

Kindra Bierly:

Exactly. And you never want to pay cash for a depreciating item. Anyway, that is a monumental waste of time.

Matt Manero:

Yeah. I mean, I think Dave Ramsey talks about it, you know, uh, in never have credit card balances agreed at a 25%, you know, uh, interest rate on your credit card that is not the smartest play. And to your point, if you pay cash or you pay off your house and it’s going up at a three or 4% rate every year, it’s an appreciating asset. It’s going up in value. But unfortunately in the stuff we finance and the stuff you guys buy, it goes down in value. Your $150,000 truck it’s worth less in three years.

Kindra Bierly:

But what if I have an engine overhaul it’s still the same year cabin chassis, you know, you’re, you’re devaluating every single day. You put mileage on it.

Protect Your Credit At All Cost

Matt Manero:

All right. So we understand that bad things happen to good people, often reflected on the credit card, medical issues. You get sick, your spouse gets sick. A family member gets sick. Divorce is a real factor. Um, you know, I, I get a divorce and I, I don’t want the significant other to benefit from the divorce. So I’m just going to go ahead and, you know, crap, the whole thing out and buy credit in his or her credit at the same time. Yeah.

Kindra Bierly:

If you plan on doing anything in the commercial world, pay your bills. I don’t care how much it hurts, pay your bills, because it will hurt you. If you let it ride and let the courts decide it, it just will

Matt Manero:

Good call. Um, and you know, we may actually, even in underwriting asks you for the divorce decree to get some clarity on it. And it certainly doesn’t look good if it said you were responsible for that debt in the divorce decree, and you just said, Oh the heck with it. I’m not going to put, I just didn’t feel like paying it.

Kindra Bierly:

Correct. And even though it’s on the divorce decree until you move that house or that car out of your name, you are still

Improving Your Credit History – Specifically for Businesses

Matt Manero:

Good call. All right. So let’s talk, um, a few strategies of how someone can increase their credit score. The first thing is as weird as it sounds go out and borrow more money. Yes, don’t pay cash for the vehicle, get alone at your local bank or your credit union, do it for even 24 months. Get that $20,000 high and then pay it down over that 24 months and have a really good new credit high with perfect pay history.

Kindra Bierly:

Absolutely. And you know, you brought up a really good point, the amount of time that you let that loan sit is actually going to help you because when you purchase, when you make a new purchase, like a car, your credit score is actually going to come down because the Bureau’s want to see what you’re going to do with that. And so every good payment that you make on time every month, no matter what, skip a meal, if you need to, you know, that’s going to raise your, your score significant.

Matt Manero:

So we were talking about, oddly enough, we would suggest if you have a low credit score, go find yourself the ability to take out a new line item on your Bureau to show new credit highs and good pay history. Um, another strategy, keeping your credit card balances below 50% of the available credit.

Kindra Bierly:

I do agree with that. And the reason why is underwriting is going to see your revolving debt. And then if, if they say you have 80% consumed, they’re going to sit back and say, are you living off of your credit cards? And that’s not good. However, there’s always a scenario. For example, if someone uses their credit cards for their guests and we just happened to pull their credit at an off time, when the invoices come out, they haven’t reported the payment yet. I mean, it just kind of happens, but if you send us your credit card invoices and show us that you pay every month, that’ll make it.

Matt Manero:

Yeah. Good, good call there. Um, a third element is go back to your original creditors and ask for a credit line increase. So if you have a $500 limit on your credit card and you’ve been paying well, go back and say, I need you guys to take me to 2,500 bucks, or by the way, if you have 20,000 go back and say, I need it to 30,000, and that helps change your percentage of utilization

Kindra Bierly:

So long as you don’t go out and spend it

Watching Your Credit For Financing

Matt Manero:

For sure. Right? That’s exactly right now, it goes to 30 and now you just use it again and it didn’t impact your worse. Got it. Got it. Let’s give a couple more tips, Kendra, of things that you have consulted clients on to take that credit score from a, you know, low sixes into, uh, a low sevens, because the end game is it radically changes the terms that you’ll get on the loan. And yes, look, we’re talking about truck and trailer and equipment financing here, but it applies to everything. It applies to your, when you need to get a new cell phone or your house or a home equity loan, or a car loan, all of the terms are connected to your credit score. Yeah.

Kindra Bierly:

Yes. I always give this advice to my customers, especially when they’re first coming on, watch your credit like Fort Knox, protect it because there, there are agencies out there such as a credit karma, and no, we’re not affiliated with them. I’m just using them as an example that you can actually log in, plug in your social security number and get notified every single month. And it’s important. And it’s your responsibility to do that because you can’t not know what your credit is. You have to pay attention because what if you have somebody committing fraud against your credit? You’re not going to know until you pay attention.

Matt Manero:

Yeah. Uh, just super 0.1 other reason why you have to keep monitoring your credit is you may say I’ve got 10 trucks. I’m comfortable, I’m making money. We’re good. And then all of a sudden, your competitor down the road goes out of business and you could pick up 10 new drivers and your client says, well, we’re happy to give you more freight if you put more trucks on, but because you sort of rested on your laurels for two years and said, I’m good. You’re you don’t know where your credit is and you can’t take advantage of that opportunity. Correct? Yeah, absolutely. So let’s try for one, one or two more, um, strategies. I mean, you know, if you’re in business, you need to know what your credit is, right? Absolutely. And so you’re suggesting go to one of these credit check places and monitor your credit.

Kindra Bierly:

Absolutely. And most of the time it’s free. I mean, you have your credit card companies that are actually offering that service for you. Even some of my, my banks that I use, they are offering that service. It’s just, it’s another perk to keep your busy.

Credit Inquires and Soft Credit Pull

Matt Manero:

So what about inquiries? Right? We hear that there’s this difference between a soft pool and a hard pool. And you know, what happens if we pull a credit Bureau and we see that this person has applied for credit at 10 different places in the last 30 days,

Kindra Bierly:

It’s interesting that you should say that because, uh, within the last couple of years, uh, Experian came out with an article and they said long, we understand, they understand that you are in shopping mode and it’s, and I can give you this document for future use as well. They said, as long as you are within a 14 day window, it’s going to count for one. So it’s, it’s actually something that’s calmed my customers down because there are going to be times where if one shoe doesn’t fit, you got to try on another. And so it’s very, very helpful for us to know that information as well. And it, it just makes the customers feel so much better.

Matt Manero:

Yeah. But let’s give a little inside baseball on this one, too. If we, as the finance company, see lots of inquiries, it’s going to trigger us to ask the question of, are you really just buying this one truck? Or are you actually buying 10 trucks? And we’re only seeing one because that goes into underwriting’s determination of, do you really have the wherewithal to buy all these trucks? And are we going to getting duped that we’re only seeing one, but there’s actually in 30 days is going to be nine more trucks, right?

Kindra Bierly:

Or if you are, are you getting declined for all of these trucks? And if so, because if your credit’s decent and I’m not seeing, I’m not understanding why I want to know why exactly

Offsetting A Low Credit Score With A Down Payment

Matt Manero:

That’s a good point. Good point. Now let’s talk about how somebody can offset a low credit score with down payment or providing additional information like bank statements and tax return to us.

Kindra Bierly:

Oh, there’s no such thing as too much information. When it comes to underwriting, you have to be an open book with your underwriter because eventually they will find out if not during the underwriting process potentially later on. So having strong bank statements is going to be a huge factor, because if you are running a little bit short, maybe you only have maybe five or six trade lines, but they’re good. You know, you’ve, you’ve good installments and good credit card debt, but it’s just not enough, you know, being prepared for the purchase. I cannot stress this enough. I, this is my credo, proper planning, prevents poor performance. I’ve been saying that for years, um, you know, as long as you are prepared for your next purchase, whether it’s cash in the bank or

Matt Manero:

Deposits managing expenses balances. Yeah.

Kindra Bierly:

Right. And, and make sure that, especially if you are a growing trucking company, make sure that you are taking care of your financial statements. I get, I get clients all the time who, uh, maybe there are five, 10, 15 trucks in their fleet, but they give all their receipts over to their accountant. One time a year. I would highly recommend doing that quarterly just because of the fact that if you want to grow, our underwriters are going to want to see what you’ve done during the current year. Especially if it’s November, December timeframe and you want 10 trucks. Great. What have you done this year? I don’t know. What do you mean? You don’t know?

Separate Your Personal Expense From Your Business Expense

Matt Manero:

No. So, um, you know, this also brings up just a cautionary tale for, for everybody watching that, you know, we’re, we’re, we’re smart. And when you’re showing us your bank statements, we want to see that you separate your business expenses from your personal expenses. So we don’t want to see, you know, your hair cut and jump for fun for your kids, birthday party, all being run through your business bank statement. Right?

Kindra Bierly:

That is correct. Uh, on occasion, it it’s okay. Just because, especially if they’re a single owner operator and if they don’t need it, because that is their job per se. Uh, but if you are a multi-track customer, you really do need to separate it because if you are starting underwriting, if they’re starting to look at the details behind the transactions, how are they supposed to know which is personal and which is business that throws them off. And I mean, the loan could get declined.

Matt Manero:

So let’s finish on this note cause we get this a lot. Um, well, I’m just going to put it in the name of my business. So why do you care about my personal credit?

Kindra Bierly:

That is so important, especially as a startup, because when you put it in the name of your business and you’re expecting business credit, you don’t have business credit yet. I get that about every day later on down the line, maybe two, two to five years, that is when underwriters will feel more comfortable about offering a corporate only scenario. And you have to really earn that because they don’t, they don’t just hand it out. You have to maintain a good pay net, which is, is the business, the business side of the bureaus. A lot of people just know the three primaries for personal while there is also PayNet there’s dun and Bradstreet. There’s I think Equifax does it as well. I mean, you have to pay attention. And that’s another thing that you have to be aware of what they’re reporting as well.

Why Personal Credit Matters For Your Business

Matt Manero:

Yeah. So the, I just want to touch on this again, cause it’s we do get this question a lot. Why do you care about my personal credit? If I’m putting in a name of business and we want you to put it in the name of your business, we want you to have the liability protection. We support that strategy, but if it’s in the early stages and you can’t qualify for Corp only, we also want to know that you’re willing to step up for your business. And therefore we’re going to ask us as not just us, every finance company is going to ask for your personal guarantee and therefore it triggers looking at your personal credit. And we want to see that you have some positive history of consistent paying on debt, kind of close to the amount that you’re looking to borrow.

Kindra Bierly:

Yeah. And it really does show a commitment to, if you really want this business, you’re going to invest yourself into this business as well. Yeah.

Matt Manero:

And we want to see that you have that commitment and you’ll step up. And then, you know, there’s nothing better than us being able to reward a customer. And we have won many deals by saying to the customer. We think your company credit is so strong that we will do this deal without your personal guarantee. And their local bank is requiring their personal guarantee. And they’re now at a point in their career where they don’t think they have to do it that way.

Kindra Bierly:

Absolutely. I see it every single day, those 20 year old, 30 year old companies that have, they’re just like, I don’t understand why do I have to put my signature on here?

Matt Manero:

I remember winning a, uh, a deal for, um, light duty vans for an air conditioning company that had, I had heard their ads on the radio for 20 years. Right. And the deal came across my desk. And I remember calling the customer and saying, you know, who are we up against? He’s like, well, you’re up against my local bank. And I said, well, I bet your local bank is requiring a personal guarantee. And he said, they are, and I don’t want to do it. And I said, how about will I win the deal? If I do court bowling, he said, yes. And we did a court only and we won the deal. So that’s also, there is a point in your business where you don’t have to personally guarantee everything anymore. You’ve earned it. Yeah. Good point. All right. Any final takeaway for someone on what their credit looks like and how they can improve it.

Pay Attention To Your Credit

Kindra Bierly:

Just pay attention. I think out of everything that we spoke about today, pay attention to your credit and your bank statements and your business in general, because we want to do business with you, but not all business is good business. And if you’re not doing good business, we just can’t.

Matt Manero:

Yeah. And by the way, sometimes a turn down is actually a good wake up call for you. It might be our way of saying you’re not quite ready. Right? We need you to, we need you to have a healthier business before your, your, your, your, your business can reach your dream.

Kindra Bierly:

Yes. I’ve sat on the phone and had those conversations. But then I also went through their Bureau with them and said, you need to fix this, this and this, your score will come up organically. And a lot of the cases, especially with new accounts, or if they’re paying off their credit card debt, it’s not anything that they have to do, but wait,

Matt Manero:

So Kendra and I are going to move to another video next, which we talk about, what will it take? What are the terms, the payments, the structures that you could expect from us and of the industry to buy your next truck. So stick around for this next video. Thanks for being with me right now.

Keep tuning in at CFF-TV. We’re just getting started.

We’ll see you down the road.


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The experts at CFF answer the most commonly asked questions about financing, including refinancing, which is better loan or lease, and how credit is measured for a company.

About Commercial Fleet Financing, Inc.:

At Commercial Fleet Financing (CFF), our pros have given smart advice to fleet owners and owner-operators in the transportation, moving, towing or construction industries for more than two decades. With CFF, finding the right financing solutions is a phone call away and most borrowers secure commercial vehicle financing with ease. To talk directly with one of our finance pros and get started with credit approval in as little as two hours, CFF’s phone number is (469) 281-2962.

2021-05-10T11:01:23-05:00
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