Working with buy-here-pay-here (BHPH) car dealers has shown me firsthand the countless advantages of credit reporting – more on-time payments, reduced risk of buyers overextending themselves in the future, and greater legitimacy in the eyes of financial institutions, just to name a few. However, I'm convinced that far too many dealers are failing to capitalize on the biggest perk of all – helping customers rebuild their credit.
Credit as Carrot or Credit as Stick in a Reporting Mindset
There’s no doubt that credit reporting encourages on-time payments. It’s a double-edged motivator, since buyers will suffer negative marks in their credit file if they get behind, and will benefit from building credit when they pay as agreed. Between the two, I believe the appeal of rebuilding their credit is the most effective.
Think about it … most BHPH customers have a tough time getting any kind of loan, as it is. Their options are limited, and the future seems bleak without a way out of this financial mess. When you report credit, you provide them a pathway to a better future – at least for those who make their payments on time. Not only are you offering these customers a loan when they're down on their luck, but you can also help them begin taking baby steps toward healthier finances.
Proudly Promote Your Credit Reporting Service
Of the BHPH dealers who report credit, most already notify their customers at the time of purchase. It’s usually phrased as a warning – as in, "we report credit, so you should pay on time to avoid more negative marks."
But what if you added to that message? What if you positioned credit reporting as a service to the customer, to help them rebuild their file with positive records? Sure, you can still include the word of caution. Just focus on the fact that paying this bill every month could jumpstart the financial turnaround he or she has been hoping for, since you will report each payment to the credit bureaus. Now that’s customer service! And it’s often met with an unexpected loyalty that lasts for many years.
Automate Credit Reporting to Save Time and Avoid the Regulatory Radar
If you're not already reporting credit, it's probably due to one of two concerns: 1) the time it takes, or 2) the regulatory burden. These are legitimate roadblocks, but they don't have to stop you. Your DMS may provide integrated credit reporting with all the major bureaus, and credit data is automatically sent every month.
When you work with a vendor that follows airtight policies and procedures for accurate credit reporting, you save valuable time and minimize your regulatory risk. Automating your credit reporting duties means very little time and effort are required, while still producing undeniable value for your dealership and the customers you serve.
To learn more about integrated credit reporting, visit dealersocket.com/idms to schedule a demo of iDMS.
Credit reporting is a highly regulated area of compliance, but you can sleep easy knowing your efforts are helping – and not hurting – your business. Download our white paper, Credit Reporting 911: Your 3-Point Defense Against Credit Reporting Complaints.
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