Why didn’t my customer get pre-qualified through Hearth?

We know it’s frustrating when there are no loan options for your customer on Hearth.

We’re able to find potential payment options for 70% of homeowners. However, like any financing partner, we can’t show options to customers every time. In this article, we’ll explain why a customer may not be prequalified and how to walk through next steps.

Why didn’t my customer pre-qualify for payment options

Among other factors, each of Hearth’s lending partner considers 3 primary factors when pre-qualifying someone for financing options: credit score, income, and loan amount.

Credit score

Our lending partners use your customer’s credit score to estimate whether your customer will pay back a loan.

Key point: While someone’s credit score can be useful for predicting eligibility and rates, a good credit score is not enough to guarantee pre-qualification. If a homeowner has a bad credit history, for example, our lending partners may decide not to pre-qualify them.

Income

Our network also uses a homeowner’s income to predict the likelihood your customer can make monthly payments. If someone’s requested loan amount is a large percentage of their yearly income, our lending partners may not offer a loan to the homeowner.

Loan amount

If a homeowner’s debt-to-income ratio is high, our lending partners may choose not to pre-qualify them for a given loan amount. Many lending partners will consider a maximum debt-to-income ratio of 40% when pre-qualifying someone for loan options.

Bottom line? Even from all of our data and testing, we can’t predict perfectly whether a customer will pre-qualify. However, because of our broad network of lending partners, we’re still able to pre-qualify more customers than many other financing partners.

Next steps

What are we doing to reduce the risk of a rejection?

Hearth works with a network of 12 lending partners that each cater to different range of credit scores. When a customer goes through Hearth, they are automatically considered by our network. This approach increases the odds that even a low-credit customer will find payment options.

We take the privilege to serve your customers seriously. Here are the concrete steps we’re taking to increase the odds of pre-qualification:

  • Expanding our network of lending partners: We’re always adding more lending partners to increase the odds that at least one can work with your customers.

  • Finding other financing options: We’re actively exploring other financing options for low-credit customers as a fallback if they don’t pre-qualify for unsecured personal loan options.

Your customer got rejected. What do you do now?

  • Reassure your customer: Remind your customer that going through Hearth’s pre-qualification process didn’t affect their credit score, so their credit profile wasn’t damaged if they didn’t pre-qualify

  • Let us help you: We’re here to walk your customer through the pre-qualification process and explain their results. If after reading this article, you are still unsure why your customer didn’t get pre-qualified, give us a call and we’ll try to figure it out together.

What can you do differently for future customers?

We want you to know what to expect as you move forward. Here are things you should know as you try Hearth with your next customer:  

  • Keep using the product: The more you use Hearth, the more likely you are to profit. Contractors that use Hearth with multiple customers dramatically increase their likelihood of making a huge return -- and on average, contractors that fund just one extra project with Hearth make $42.40 for every $1 they spent on a Hearth subscription.

  • Use Hearth to qualify your customers: If your customer doesn’t find options through Hearth, they may have a difficult time finding a personal loan anywhere. Use Hearth as a barometer for whether your customer will be able to finance your project.

  • Set expectations: Make sure you set expectations before you have a customer pre-qualify. If your customer has low credit, tell them that Hearth may not be able to find payment options for them. Use the chart below to calibrate your customers’ expectations:

  *Pre-qualification rate is calculated for each FICO range by dividing the number of pre-qualified customers by the total number of customers who submitted a Hearth loan request.    **Average lowest APR is calculated for each FICO range by taking the average of APRs between the 0.5th and 15.9th percentiles of all APRs returned. Please note that APRs will vary by customer and can be as low as 4.99%. This column is meant to illustrate the lower end of rates you and your customer can expect.

*Pre-qualification rate is calculated for each FICO range by dividing the number of pre-qualified customers by the total number of customers who submitted a Hearth loan request.

**Average lowest APR is calculated for each FICO range by taking the average of APRs between the 0.5th and 15.9th percentiles of all APRs returned. Please note that APRs will vary by customer and can be as low as 4.99%. This column is meant to illustrate the lower end of rates you and your customer can expect.

We love working with our contractors and are committed to offering the best product to both you and your customers. If you have any questions or want to discuss the best way to find financing for your customers, give us a call at 512-686-4141.


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