Ep #6 Unlocking the World of Equity Funding with Underwriter Jean Vann

Introduction: 0:13

Ready to get the inside scoop on equity funding? Tune in to TDJ Equity Funding Insiders podcast for an in-depth look at what it takes to access financial capital and maximize your investments here from experienced professionals, including bankers, underwriters, loan officers and industry experts, as they share their unfiltered stories and valuable lessons on securing funds.

Jacqueyn Jackson: 0:47

Hello everyone and welcome to today's podcast. I'm Jacqueline Jackson, your host of TDJ Equity Funding Insiders podcast, and today we have a special, special guest, someone or profession that we all would love to know but hardly ever see. It's an underwriter and her name is Jean Van and she's from Florida, and so Jean is going to join us today and give us her insights and knowledge into dealing with personal funding and dealing with business startup funding as well. Welcome, jean, and thank you for coming into our show today, hi, jackie thank you so much for having me today.

Jean Vann: 1:26

It's a pleasure to be here.

Jacqueyn Jackson: 1:28

And pleasure to have you. So first of all we want to do, jean, is if you would let's start off with getting telling people, tell our listeners a little bit about you, as your experience is on this as well.

Jean Vann: 1:40

Okay, great. So I have been in sales probably for about 25 years Sales consulting, helping people clients figure out the best way to do things, regardless of what kind of industry or field they're. In the last 10 years I've been an actual direct lender and or funding consultation consultant, helping people actually get the money and guiding them on how to get the money and where to get the money. So about 25 years altogether, but the last 10 I focused strictly on the actual direct lending and funding.

Jacqueyn Jackson: 2:19

And funding process wonderful, and so I guess we also want to do. If we can, let's explain for us underwriting what are some of the duties that the underwriters actually do from your side, or what you know.

Jean Vann: 2:32

Well, the basic process begins with really evaluating a client for the process to begin with, and we initially take a look at a credit report. What does your credit profile look like? What kind of accounts do you have? Do you have a good mix of credit cards, bank cards, retail cards, mortgages, auto loans, any type of installment loan? What kind of history do you have?

Jean Vann: 3:01

The lenders want to know how good you pay bills, how good you borrow money. Are you good at getting amount of money and paying it back on a reasonable amount of time and doing that successfully? So we do look at that. And then we look at your overall debt, because people want to know can you pay for the debt you have and Get more debt and afford to pay us back? So when the lender says you know hanging, they want to know can you pay my loan back if I give you money? So they're gonna look at your debt to income ratio. So it's very important to know what are my monthly expenses versus what is my monthly income. So those are the two main things that we start with when evaluating client for underwriting.

Jacqueyn Jackson: 3:44

Okay and we know, like on in our as loan brokers, most underwriters we do not even get to talk, to even speak with. That's why I'm so excited to have you on our show today that they are basically working directly with the lender and Qualifying people. So that's what you guys do. You're like behind the scenes. Now, when it comes to credit, we know it's a lot of misfortune, misstouts of how credit supposed to go, but if you could, what would be typically a good? What should you look like, credit score wise, if you want to start looking at a personal loan? What do you think those things, what you should look like, what you think that profile should look like? That's what I'm trying to say. Can you give us an example?

Jean Vann: 4:23

Absolutely. Thank you for asking that, because that is probably one of the most important Misconstrued items that people don't understand. Everybody, you know, I hear it every day oh, my credit score is, you know, 750. I'm great, you know, but everything is not about a number, it's what's behind the number. So, having a good credit score, yes, it's very important for the lenders to even, you know, want to consider you. So I would definitely say try to keep your credit score at least above 700.

Jean Vann: 4:53

Know what's behind your credit score. Do you have good revolving credit cards? Do you have a lot of bank cards and a lot of high balances, or do you keep your balances low? It's very important to make sure that you keep your credit card balances low, preferably below 30%, because that means you're not out misusing your money, you know, or running all your credit cards up. Lenders look at that as misuse of funds, getting a little reckless, not managing your finances correctly. Do you have a mortgage? Do you have an auto loan? How long have you had it?

Jean Vann: 5:28

You know, having a good overall mix, there's four components to your credit report. That is, the age of your credit report, the type of accounts you have, the mix, what they call the mix that those two items right. There are Huge factors in your credit profile then the actual utilization of your credit revolving accounts and Then the age of your last credit account and the number of inquiries you have. So you want to have a good mix. You want to have low utilization, preferably the lower the better, because that increases your credit score. So the lower your utilization, the higher your credit score will be. If you have a credit card that is maxed out I don't care if it is just your local Target card and got a $1,000 limit, but you've got it maxed out at $1,000 your utilization is going to be a hundred percent.

Jean Vann: 6:25

Just on that one card. That's going to affect your overall credit score. But once you pay that down, you can see your credit score job. You know, 20 to 30 points just by paying that one card off. So if you do that with all of your cars, maintain lower balances. Keeping them low Every month is going to keep your credit score higher. So keep that things in mind in keeping a good mix keeping all your bills paid on time, don't have any late payments, don't have any collections.

Jean Vann: 6:57

Do you have any charge-offs in the past? Oh, I forgot to pay off that one little credit, one bank. You know $300 credit card from five years ago that I just let it go. Well, it's still on your credit report and it's still affecting your credit score. When we're looking at these credit reports every day, I see all kind of things and people will be like oh, I didn't know, I was even there, you know, I had no idea. So it's very important to you know keep a maintained profile every month. Monitor your credit profile every month. I recommend definitely doing something with experience online Because these monitoring services they don't always report some of the old stuff that you don't know is there. So all these little factors will keep your overall profile looking strong. Keep your credit score over 700. Keep your utilization down below 30%. Do you pay all your bills on time? Don't have any late payments and try not to have any old collections pop up that you forgot about.

Jacqueyn Jackson: 8:00

So what you're saying I totally agree with the gene, because you know, working with you and working with a lot of underwriters, which we don't necessarily talk to a lot of them directly, most people don't but I have found out that what we did put together Something based on what you're saying, that we let people know and you correct me if I'm wrong that we tell them that you need to have, you know, six, seven hundred credit score, like what you said.

Jacqueyn Jackson: 8:24

We asked that you have no derogatory is like in 24 months. We also asked if they can keep their inquiries like six, like six queries in a year or even maybe less than that is what they want to do. And also to make sure that that 30% means that if your credit card, like you said, is a thousand dollars, that means you only should spend three hundred dollars a month and don't go over that. And so we put that in place. To let people know. This is to give you some type of guideline, because Normally we don't really, when it comes to doing credit and you know this as well and we've talked about it people apply and just hope it Sticks. But you know it's not, it's a method to the madness, if you just learn how that works, amaculate.

Jean Vann: 9:07

That is so correct. So many people don't understand that going out and applying for every credit card you see, just because, oh, this one's got a good incentive, or this one's got a good interest rate, or this one's got a 0%, if you apply for all of these credit cards all at the same time, now you're bogged down with all these inquiries and that's not going to look liquid to lenders, because lenders are thinking, oh, now you're a shopper, you go out and apply for every credit card there is out there, and then that's a risk of running those balances up and being careless with the money.

Jacqueyn Jackson: 9:44

Right, right, exactly. So it is so basic what you're saying. Like we tell people your credit plays a factor when you're actually trying to get funding. You just got to realize that and have to respond. So now I've been told and you probably heard it as well that I get an EIN or I do a LLC, that I can get credit with that. I guess you can to a certain point, but when it comes to you starting out, they're going to look at that personal credit, right?

Jean Vann: 10:10

Any time you apply for credit I don't care if it's for personal or business Any time you apply for any type of credit your personal credit report is going to be the first thing anybody looks at. Even if you have a Dunham Bradstreet or if you have an experience business, they're still going to automatically pull your personal credit and look at you first and foremost. How is your personal credit look?

Jacqueyn Jackson: 10:38

How responsible are you and saying that, pull your credit and I know you've mentioned it before in some discussions. We had that sometime you'll get your credit pulled with not being aware of it. So how does that work? Because you said they will pull it just by you answering a few questions and now you've got a hard pull. So what's the difference? I guess, hard pull than soft pull. I guess we need to probably explain that. So tell us about that. Okay, all right.

Jean Vann: 11:03

So a lot of times everybody will tell you oh, I'm just going to look over your credit report to make sure that everything looks fine. I was counseling a young lady earlier today. She's wanting to buy a home and she's been talking to somebody and so I showed her on her credit report. Every time you've picked up the phone and talked to him, he has hard pulled your credit.

Jacqueyn Jackson: 11:23

Wow.

Jean Vann: 11:24

He is not just looking it over. You know. You're basically saying I'm trying to fix my credit, I want to do this, I want to do that, I want to get funding for my business, I want to buy a house. I looked at her credit report and she has these inquiries on there and she had no idea that he was pulling her credit as a hard pull every single time. So the hard inquiry is when somebody is putting a hard inquiry on your report. They're physically pulling your credit report and taking a look at it.

Jean Vann: 11:52

A soft inquiry is more of a promotional thing. So you get an offer in the mail saying oh, you're pre-approved for a credit card, you're pre-approved for a loan. That lender has done a promotional soft review. Basically, they can run a report or a program that gives them a review of every type of client they're looking for. That is a soft review. So there is no hard inquiry. So if you pick the phone up and you call somebody and you say I'm trying to get funds for my business or I'm just starting out, I want to know what I want, what do I do? How do I get money and say, oh well, let me take a look, get some information from me. Now they've got your name, your address, your date of birth, your social security number.

Jacqueyn Jackson: 12:40

That's really all they need.

Jean Vann: 12:42

Sometimes they don't even need your social security number. They can't pull your credit with just your name, address and date of birth. That could be a hard inquiry and you don't even know they're doing it. I see every day so many people come in. They have great credit profile but they have up team credit inquiries and I ask them Right right, 20, 30 inquiries.

Jacqueyn Jackson: 13:04

How many people?

Jean Vann: 13:05

have you called? How many people have you called looking to get this loan Right? Oh, I just called. You know, I just called this one guy. Well, this one guy has now put you out there to all these other people who are now pulling your credit. So just be careful, you know who you talk to If they tell you oh no, no, I'm not doing a hard inquiry.

Jean Vann: 13:26

You make sure that you understand what information you're giving them. Give them your first name. Don't give them date of birth or social. Unless you understand that, you will possibly get your hard credit pull.

Jacqueyn Jackson: 13:39

Right, and you made a good point. People did not understand that you don't have to give your social security number, if you've given them everything else, for them to actually pull your credit. That's what I think people surprised in inquiries, right, because you've mentioned that. I mean we don't need to sell security, we can just pull it, and then you have all those inquiries on it. So I think that's something great that you said that our listeners need to be aware of. So when you go in, I suggest, like with us as a loan broker, we do soft pools and that's it, and we don't do anything because we cost, we don't want that credit to have. You know, go down because we're trying to get funding for them. And but you need to ask that question. I don't think we even realize, jean, that we should even ask are this going to, is this going to be a hard pull or a soft pull? And I think that's what we should do, even when we go on and inquire. I mean, what do you think?

Jean Vann: 14:27

Absolutely, absolutely. Think of when you went to buy a car, when you went into the dealership, you sat down at that fire.

Jean Vann: 14:35

They are the worst, and they are. I always tell people how to get around that. I'll give you that example in just a minute. Okay, but this is what you can do in every day situations. You go to that car dealership and he's like oh, I'm just going to run your credit report real quick here to make sure that you pre-qualify. He just now ran your credit report through 10 banks. You have 10 inquiries. Yes, and you don't even know it.

Jacqueyn Jackson: 15:03

Yes, that is so true.

Jean Vann: 15:05

That's exactly what happened. So what you want to do is you want to get pre-qualified. You want to work with someone like Jackie, who is, you know, the loan broker. She can get you pre-qualified by doing that soft pull and having an underwriter read look at everything to see what you are pre-qualified for, no harder.

Jacqueyn Jackson: 15:23

With no damage to your credit. Exactly.

Jean Vann: 15:26

No damage to your credit. You know, you see this all the time. You know this won't affect your credit. This won't affect your credit. Well, you have to be careful. At what point does it not affect your credit? Because sometimes you think if you go do this, you don't realize how far you've gone with an application. You know, oh my gosh, now I've got a hard inquiry and I didn't mean to do it. So you always want to work with somebody who can get you pre-qualified without doing the hard inquiries, because somebody is helping on the back end, looking at your credit report for you, letting you know hey, this is what you look like. You know, this is what kind of funding you can get without. Now nobody's done hard inquiry.

Jean Vann: 16:07

So that's how you get around it. Make sure that you work with somebody who knows that they can do get somebody to look at it without having to do that and shop you around.

Jacqueyn Jackson: 16:16

Right, which is a good idea. So we had some listeners actually send some questions in to ask you and one of them they asked was the underwriting process compared to maybe what after COVID or before COVID? It's a little bit more strict or tighter. So tell us about that. What's going on with the underwriting you believe now at this time?

Jean Vann: 16:37

Oh, my goodness, things are changing every week. Pre-covid, lenders were happy to lend money. You know you look good. You know you have the income, everything looks great. You know they were approving loans constantly, you know, without fear. But now, post pandemic, and it really at this point right now, doesn't have anything to do with the pandemic itself. It has to do with the current economy.

Jacqueyn Jackson: 17:02

The.

Jean Vann: 17:02

Federal Reserve meets every six weeks to decide are we going to raise the rates? Are we going to raise the rate? So, every six weeks, when you hear that the rates are going up another quarter percent oh, it's going up, you know, half a percent you might not think that's a lot, but it affects funding because lenders have to take the new prime rate, which today is at 8.25%, and they're going to pass that increase on to us, the consumer. So they're going to make their profit. So the rates have changed dramatically. You know, pre-pandemic, the rates were great. If you had a good profile, you were getting good rates. Now it's, you know, you got a great profile and your rates are not as great as you think they should be. It's because the lenders are now tightening their belts because they're scared to lend money.

Jean Vann: 17:59

If you've noticed, in the last few months some big banks have gone under, you know. So banks are lenders are scared to lend money left and right because they don't want to take on too much debt and not give out good rates. So now they're passing those high rates on to us and therefore we're not getting the rate. So and their overall underwriting is getting a lot stricter. They're doing a lot of new things that they didn't used to do. They track you digitally. They can track your email address. They can track your IP address, they can track they know your whole history.

Jean Vann: 18:38

So if they don't see something that looks right, that's going to raise a flag to them and then that's going to be. I don't know. You know you go in the risk pile.

Jacqueyn Jackson: 18:48

Right here.

Jean Vann: 18:49

So we've been seeing a lot of people get rejected because, you know, different things have come up, so they're definitely putting the what, as we say, putting the screws a little tighter on their underwriting.

Jacqueyn Jackson: 19:03

Right Process and that's understandable. And I think that's what's great about this show. Is that our podcast? Because we try to give people insight to the funding industry, what's happened behind the scenes and what's going on, because we're not saying, no, you can't get the funding. We just want to give you a direction on what it is now Because, like you said, it has changed. What we did five years ago, two years ago, yesterday, has changed, and then you know especially right in this field. So I think that's great. The other question I definitely want us to get that I think is really important and one of our listeners mentioned let's explain to people what is authorized user. A lot of people come to us and they like well about credit. You look at the credit and then I see they got four authorized user and they don't have a counter that. Oh, how does that affect them when our personal underwriting, how the underwriters look at something like that? Let's talk on that right quick.

Jean Vann: 19:51

Okay, that is a good question because I see this every day. Oh, I have a 780 credit score. Well, when I look at your credit report and I say you have four authorized user accounts Well, yeah, I mean, those are my mom's credit cards. Well, mom's paying the bill, mom's using those and mom's bills, mom's getting the credit for that. You're just authorized to use your credit card when you go to the store. So the bank doesn't know or they don't see you as the person financially responsible.

Jacqueyn Jackson: 20:21

It don't cover as much weight as people think. I think that's what that is.

Jean Vann: 20:26

It basically carries no weight. Oh no, weight what it does, is it carries no weight when it comes to lending money.

Jacqueyn Jackson: 20:34

Lending money. What?

Jean Vann: 20:35

it does. It does help. It does help build credit. I did this for my own son. He was just out of college, didn't really have, you know, didn't have any credit, you know, didn't know how to do anything. So I said I'm going to make you an authorized user on this particular bank card.

Jean Vann: 20:50

You know, when you use it. You know. You know, make sure that you tell me that you've used it. You know, pay me the money that you use it so I can make sure it gets paid. I'm financially responsible regardless of what he does.

Jacqueyn Jackson: 21:01

Right.

Jean Vann: 21:02

So when he goes to a bank and the bank says, well, you don't, can't show me that you are using credit wisely and making the payments and this and that the other, well, I have this credit card. Well, that's your mom's credit card, no, so a bank will say, okay, he went to a Wells Fargo his Wells Fargo bank because he had a relationship with his checking account and savings account. So when I put him on the card, it helps him get a starter card with Wells Fargo. I think they gave him like a $400 credit card. Right, that's how he started building his credit. So it helps with something like that. But when it comes to real lending, it has no way on letting a lender know that you can personally, financially responsibly handle credit.

Jacqueyn Jackson: 21:44

Exactly, and that's the biggest shock that I've had. People come our way and we have to explain to them. When it comes to lending unsecured, unsecured personal funding, they're going to look at you, not authorized user, and you know people are paying a lot of money gene for them to use other people cards. They got some deals out here like that that people are jumping on. Well, I've used you know $20,000 line of credit and I would just put on there. I'm like that helps with your scores and maybe do well at a car lot. But when it comes to lending, they're looking a lot deeper than that and, like you said, authorized user is not going to cut it and that's what they have to understand.

Jacqueyn Jackson: 22:21

So I think that is something great. Yes, ma'am, what else you got to say on that? Yeah?

Jean Vann: 22:26

Well, you well, you mentioned, you know, unsecured funding, which is what you know we primarily focus on, for you know, starting up businesses and helping people get funding. Think of it this way Would you loan person next to you $10,000? No collateral, nothing to hold and guarantee that you'll get your money back? No, Now your friend goes off on vacation, it has a great time, Goes to Vegas, blows the money. Now they can't pay you back. That's how the lenders look at it. They're taking all the risk because this money is unsecured.

Jean Vann: 23:07

So you know you want to take a vacation and run off to Mexico with their money. That's great, but to them that's not great. So they take. You know you enjoyed your vacation, but now you come back but you feel like you know I don't have to pay this back. You know I don't have to. I'm not going to lose my house, my car, nothing. I don't care. But that's how lenders, that's how lenders think. You know, unsecured money. I'm taking the risk in giving you money. Are you worthy of getting this money, especially when you're talking about thousands and thousands of dollars? You know, if I loaned you to 10 bucks, you know I'm not going to be out 10 bucks, but I'm not going to worry about 10, but when a lender gives you thousands and thousands of dollars, it makes a big difference.

Jean Vann: 23:49

So you know, that's where the financial responsibility showing a lender that you are financially responsible is huge.

Jacqueyn Jackson: 23:56

It's huge and that's something you have to do. So that's what I tell people don't start a business and focus on your business and think you don't have to focus on your personal credit, Because, yeah, like you said, it's the amount of loan and we're talking about a hundred or two hundred or four hundred dollar line of credit. You make it swing it on that, but at some point, when you get the bigger money, they're going to look at that credit personally, even for your business. I know, even when we have like we've had people that have been approved for 1.7 million, well, guess what? They asked for Credit score, credit file and they looked at it and they wanted to know okay, he hasn't paid this lien. That's 10 years ago. What happened?

Jacqueyn Jackson: 24:33

Come to find out it was just a fee that he didn't, we wouldn't know where he had to pay and that saved him. But between me and you and everybody that's listening, the lender was ready to deny him for that alone, 1.7 million and he had a credit score of 760. So what you're saying is correct and we have to really take pay attention to that. So we definitely want to look more into. I mean, this has been awesome. You have always given also information to our group, and today you did that as well, and we thank you so much, Ms Jean. Is there anything else that you can think of that we didn't mention, that you would like for us to mention for our audience today?

Jean Vann: 25:13

Well, if we're talking to people who are looking to start a business, just kind of know what you're doing. As far as getting into starting the business, have a plan. Don't quit your day job just yet. You still need to pay your bills. Today I've seen so many people. You know I thought this great idea and you know I've got, I'm going to do all this, I'm going to get the money. And then I put, oh, I quit my job last week. Well, how are you going to keep paying your bills? You know the lender doesn't want to.

Jean Vann: 25:42

You know, so have a plan on have a long term plan, short term and long term plan, because this doesn't happen overnight. Keep your credit intact, keep your house in order, pay your bills on time, keep everything nice and neat. And then I also have belief. Believe in what you're doing. If you have a dream, go for it, but know what it takes to get there, because we, there are people out there who want to help you. There are people who want to, you know, help you, get the money and they'll get you the money. Just believe in what you're doing, but keep, keep everything in order before to make it happen.

Jacqueyn Jackson: 26:19

Well, thank you, that is awesome, and I thank you for sharing your thoughts, your visions and your opinions with us today. We do appreciate you. So do we want to thank Jean for coming in to visit with us today. Ms Jean, thank you for coming.

Jean Vann: 26:35

Oh, thank you so much for having me. It was a pleasure, pleasure, always a pleasure, working with you, jackie.

Jacqueyn Jackson: 26:40

Yes, ma'am, and I want to thank our audience, our podcast listeners. I want to thank you all for tuning in as well. Until next time, you all, take care.

Introduction: 26:50

We hope you enjoyed this episode of TDJ Equity Funding Insiders Podcast. If you'd like to be a guest or get in touch with us, please visit our website at tdjequityllcnet. Forward slash podcast or email us at podcast at tdjequityfundinginsidersnet. Until next time, take care.