Are You Credit Bureau Ready?
Are you Credit Bureau Ready?
Our team at Bloom Credit has deep credit expertise. I can say this confidently, as a large portion of my first 100 days as Bloom’s SVP of Operations has been spent learning from team members to understand the essence of ‘credit’ and how our company is working to simplify it.
We take pride in helping firms of all sizes connect to credit data ‘better’ through our suite of easy-to-use APIs. Additionally, Bloom’s CTO, Mike Esler, and his team are building upon this solid foundation and continue to introduce enhancements that will drastically improve the developer experience when accessing and working with sensitive consumer credit data. One of these enhancements is introducing GraphQL, which will allow developers to efficiently access and retrieve over 100 critical credit attributes and unlock the ability to customize and beat traditional risk models.
My primary learning within my first 100 days is that speed is of the essence, though not just in the way of subsecond API pulls and credit decisions, but instead about best practices when navigating the diligence and credentialing requirements by the major credit bureaus – a process that we try to lower to weeks versus the traditional timeline of months or even year(s).
My hope is that this quick guide provides your business with the insights needed to significantly reduce time spent in the Credit Bureau ‘credentialing’ queue. If you are just getting started and handling this alone it can feel like a very painful process.
The three major Credit Bureaus each have different requirements, processes, teams and timelines to approve (or ‘credential’) your organization for access to pull credit data or report (furnish) your consumers’ tradelines to the bureaus on a monthly basis. As stated above, this can take many months (12+ at times) to simply earn this stamp of approval. Credit experts who have gone through this journey will likely emphatically tell you that:
- “It takes too long”
- “The process is not transparent”
- “Different teams handle different things”
- “I needed to continuously repeat myself and defend my core business model”
- “They kept asking me for more documents, screen shots, attestations and policy changes”
Here is what to expect and where working with our credit experts will simplify and quicken your experience….
Aligning Your ‘Purpose’
The first leg of the journey is to properly identify your ‘permissible purpose(s)’ and tie your business model and use cases to specific credit products. A core tenant of the Fair Credit Reporting Act (“FCRA”) provides some catchall regulatory guidance on permissions and usage of credit data and luckily the list of ten permissible purposes is generally pretty straightforward. The myriad of credit pulls (soft vs. hard inquiry, pre-qualification, pre-screen, pre-approval, direct to consumer, etc) is much more nuanced as each can serve a different purpose for your business, and picking the right ones are critical for both maintaining compliance and controlling costs within your business.
Recommendation 1: Prior to kicking off the credentialing process, fully determine your reason for pulling (or reporting) credit data. With countless attributes, credit scoring models and credit report add ons, being clear on exactly what you need and being able to clearly articulate why is paramount.
Tuning Your Screens and Processes
The Credit Bureaus will need to see demonstrative evidence that you are properly capturing consumer consent, have policies and procedures in place to send adverse action notices (AANs) and have proper KYC solutions in place to check identity and flag fraud.
Recommendation 2: Get your screen shots and credit related policies & procedures on point. This is your chance to demonstrate your expertise to the Credit Bureaus and prove that key aspects of your business are fine tuned and FCRA compliant.
You need to apply for service with each credit bureau, which includes steps such as:
- Submit signed agreements for each credit product that you will be using
- Send your business license or articles of incorporation
- Prove your product and business model through terms, conditions and any other means necessary
This is a general, but not all inclusive, list of contracts, documents and signatures, and each bureau is different in their requirements and intricacies within their credentialing process.
Recommendation 3: Dot your I’s and cross your T’s. Any omission, name or address mismatch, or missing document/ signed amendment can significantly delay the process and send you back to the bottom of each bureaus credentialing queue.
Do you have a corporate headquarters, fully distributed staff or a hybrid of both? Regardless, you will need to complete a site inspection with very specific requirements that the inspector (typically virtual via Zoom or FaceTime) is charged to report back on.
Recommendation 4: Set up the locked door, window placard with your company logo, and ensure that you have a shredder to destroy sensitive materials. Understanding each requirement of a physical vs. virtual inspection and requirements of a home office vs. corporate headquarters is necessary to put your best foot forward and pass with flying colors.
You’ve now hopefully completed all of the requirements and should be credentialed shortly. I hope that Bloom had the pleasure to help your business streamline and simplify the credentialing process. Just a quick reminder (and recommendation) that Bloom has decades of credit experience across traditional lending, Fintech, PLCC, BNPL, and all of the other acronyms that are in this space. Contact us if we can be of any help in launching or improving your credit offerings!