EP 357 – The Million Dollar Funding Formula with Merrill Chandler

NCS 357 | Funding Formula

NCS 357 | Funding Formula

 

Sometimes people want to do all the heavy lifting on their business credit profile that they are creating behind notes on credit card using their personal instruments. As a result, anytime they have to carry a balance, it hurts their personal credit profile. If you are one of these people, what this implies to your business is that you diminish your funding stability. Scott talks with Credit Sense and Z Funding CEO, Merrill Chandler, about how to weaponize your credit to qualify for lines of credit from banks along with talking about some of the errors on people’s personal and business credit. They explore the million-dollar funding formula for investors and entrepreneurs out there. Learn the things you need to know about funding and credit as they tackle topics from qualified funding entity and optimized personal profile to business lending and credit.

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The Million Dollar Funding Formula with Merrill Chandler

I have a good friend, Merrill Chandler, joining us from Credit Sense all the way from Utah. For those who don’t know Merrill, he is the rock star, the man, the myth and the legend behind Credit Sense. He’s been helping so many entrepreneurs and real estate investors out there weaponize your credit. For now, you want to talk a little about the million-dollar funding formula that you are doing so well with many investors and entrepreneurs out there.

When you weaponize your personal credit profile, what we’re doing is we’re saying we want to be able to go take that profile out and leverage it, turn it into a money-making machine. How do we leverage that? Your personal profile many times is mistaken as the workhorse of your financial life and it’s not designed that way. You’re not scored that way. It’s the goose that lays the golden egg. You’re supposed to be doing all the heavy lifting. For entrepreneurs, real estate investors and noters, you want to be doing all that heavy lifting on your business credit profile and using business credit instruments, not your personal.

Too many people out there are buying notes on credit card. Personal instruments are getting on their heel ops. Anytime you have to carry a balance, it hurts your credit profile. You diminish or lower your fundability when you use your personal. Your goose that lays the golden egg, if it’s a healthy, wealthy and wise goose, then you do certain strategic activities, run certain traffic patterns on your accounts, carry certain balances. You look like a rock star to all the lenders. The lenders want to give you money because they look at your personal profile and it rocks. It’s amazing.

Z Funding is our new announcement. It’s powered by Credit Sense. Z Funding is a million-dollar funding formula. We save a million dollars. However much you want to implement the formula is how much money comes out the other end. Our minimum is $100,000. We had a client get $85,000 in his first round of funding of business lines of credit. Unsecured, 3% to 6% interest. The credit line’s where you write a check and does a deal. I think he’s a Note CAMP client, Tom from Muskogee, Wisconsin. That’s the purpose of Z Funding.

We have put it into a funding formula where you do the right things on your personal profile and do the right things to create what we call a qualified funding entity. There are certain structures that you need to have in. It’s not hard but when you do it, you put those two together and business lenders will give you business credit cards and business lines of credit. Like Tom, he got $85,000 in his first round. We’ve had people with $500,000 first round. They asked for documentation, but they saw the profile and the 24-month look-back period. She was supposed to provide financials and her tax returns and they approved her without, which makes that unsecured stated income because they didn’t end up getting the documentation. That’s $500,000 on her business. The funding formula is that process to make somebody fundable.

For those of you who don’t know who this man and what Credit Sense is, why don’t we take back a step a little bit, Merrill? With Credit Sense, they start thinking, “You’re a credit repair agency.” Let’s clear that up first and foremost. We don’t want people thinking that aspect. Let’s talk about what you do because you are not a credit repair agency.

Muggles think what they will. In 1992, I co-founded Lexington Law firm, which is now the single largest credit repair law firm in the country. I know the credit space and my roots are in founding what is a monster in the biz. Now, we’re building Z Funding in Credit Sense. It’s a monstrosity in the marketplace in being able to deliver amazing results. From that space, I learned that with tens of thousands of credit profiles, I was able to basically reverse engineer the FICO algorithm. This FICO algorithm is how they measure your fundability, whether you get a yes or a no. A credit score isn’t always that thing. The higher the credit score, the more likely it is. Without getting into the details, come to Note CAMP. I will put it all on the line.

The idea is that credit repair is the ability to delete a few negative accounts. Credit optimization, funding optimization is to build a profile that lenders want to lend to. Credit repair, delete a few accounts. You cannot credit repair your way to fundability. It can’t happen. You have to build positive accounts, run traffic patterns and do all these things that allow a lender to look at you and go, “I’m going to approve you.” One of our strategies is we teach our clients, “I only need a few grand on a credit line, but automatic underwriting when you’ve done it all right. We’ll get $50,000 and $60,000 approvals when we ask for $5,000. The software takes over because we’re hitting all the right metrics.” FICO measures 40 characteristics of a credit profile, only eight of those apply to negative items. That means there are 32 ways to raise your fundability without touching a negative of account. We are not credit repair.

NCS 357 | Funding Formula

Funding Formula: There are many ways to raise your fundability without touching a negative credit.

 

I want you to state that again because a lot of people completely bogged themselves down based on what was happening in the past. There are 40 points that measure fundability, only eight are based on background.

Only eight goes negative credit. That means we can optimize a profile and not remove all the negative items. I have clients with 800-plus fundable profiles with a collection or a judgment still on their profile because we could overwhelm negative points with positive points.

Without giving away the formula, what are some of the things that bog down those 32 points?

Let’s go over a couple of business things and a couple of personal things. Remember, it’s a qualified funding entity and an optimized personal profile that’s optimized for business lending. First of all, let’s talk about the difference between what is true business credit? If it reports on your personal credit profile, it is not business credit, no matter what it says on the card or on the statement. Our number one mistake is if you have a Capital One business credit card, Spark, or any of the other ones they report to your personal credit. It is not business credit. You’re not getting business juice. Your fundability is not positively affected by having that particular card. The first thing you’ve got to do is you’ve got to vet whoever you’re going to look at. We have a list of all the real ones. We help our clients dial in exactly what they need to qualify for in order to have true business credit. I’m telling everybody, “What’s in your wallet? It better not be a Capital One card.”

You’re saying about your business?

Yes. Here are a couple of other ones where you’re saying, “What are graded? What are the 32 ratings?” There are tiers of accounts. Those accounts can be a tier one account all the way down to a tier four account. One is better. Each type of credit instrument has a different value contribution to your profile. It could be 100% or it could be 40%. Capital One is a tier two 80% card. If it’s joint, if you’re on it with somebody else, it’s now worth 60% because there’s a downgrade in whether or not you’re an individual card user or a joint user. American Express, they’re a marketing company. American Express isn’t a depository institution, neither is Capital One and neither is Discover. They are all tier two instruments. They may be high value because you’ve had them for five or ten years, then you have $10,000 or $20,000 credit line. We’re not going to tell you to close them, but it still isn’t the maximum possible points that you can have. Not just credit score points but fundability points.

The big four banks: Wells Fargo, Bank of America, Citi and Chase, have the most stringent underwriting criteria. A business lender who sees a portfolio with the right cards, the right things, it creates credibility both in the underwriting technical metrics. As well as in the face of the curb appeal by a human underwriter. When you’ve got these awesome cards, then the best business lenders are community banks, tier two banks, tier three banks. Credit unions love lending to small businesses, but you want to have a personal profile that is impressive. You want high tier, high value accounts over on your personal. You can go anywhere. I always teased the women in the room when I do my conferences and presentations. It’s always easier to marry down than marry up. That’s the exact same thing with credit. We want an amazing personal profile so we look amazing to lower value institutions but who are awesome at lending to businesses.

A lot of people don’t understand that and that was one of the biggest a-ha moments is that credit cards and the credit things have a different scale. What’s the lowest aspect of things?

Tier four, 40%. I tell women and/or men who have Victoria’s Secret cards, “You have great taste in lingerie but horrible taste in credit.” Anything that comes from a mall is technically called a finance card. You will look at your profile and it will say, “A consumer finance card.” Anything that’s consumer finance, it’s a red down arrow. You get docked points for having any finance company card, which means somebody’s backstopping. Victoria’s Secret doesn’t carry its own paper. It could be Chase or it could be Capital One. It’s a low-value card. Any online card, all the Amazons, all the PayPals, the Walmarts, anything that is financed by another bank is a tier four, 40%. They are the worst things to have.

Don’t go closing your tier four cards. What I will tell you to do is if it’s less than six months old, close it. You’ll take a small hit in points, but you’ll rebound over six months. If it’s larger than six months old, get a funding analysis that we do because there’s a timetable. If it’s contributing positively to your credit profile, you want to replace those low-value points with high-value points. You want to make sure that you have high-value points replacing those before you close them. Part of our process is we rank all cards by their contribution to your fundability. Then we delete the bottom rung, then the next one until we have our profile.

Some people have asked me why we talk about raising lines of credit, when we do such a big thing talking about using other people’s money out there. I want to clarify that. There’s nothing wrong with other people’s money. There’s also some big merit to having lines of credit, to be able to write a check at low-interest rates. You want the lowest interest rates you can end up getting versus 12% or giving up half the deal to your private money investor. Merrill and his team over there are the best at what they do, about what they’re doing. You mentioned something about a credit analysis or a credit view. Why don’t you talk a little about what goes into that?

First things first, I want to tell everybody the best OPM is commercial OPM. These credit lines at current rates, it’s prime plus 1%, 2% or 3% or any fraction thereof. It’s the lowest possible money because they are what we call trophy lines. If you’re playing the credit game, do it right. Can you win a game if you don’t know the rules? No. To play this game, you’ve got to learn the rules and then you can win it. What is the evidence of you winning the credit game, the funding game, the note game? Trophy lines. You get a trophy when you are killing it in your knowledge and your capacity to get the right profiles that will sustain business lending. We call this unsecured stated income, 3% to 6% or a prime plus and check writing.

In check writing ability, you can do a deal by writing a check. No advanced feeds, you’re not giving away. I call it body part pricing. When you give away 50% of your deal or pay 10% to 15%, 8% in fees and interest, you’re paying an arm and a leg for your money, so I call it body part pricing. Once we get rid of that body part pricing as the only game in town, you are able to create the right structure. Any deal you want to do, you have the resources or the capital to create it. All these credit lines start out. Some people can get ten, some people can get 50 out of the gate and they grow every six months.

They grow based on your intelligent use of it, which we coach on. When you use it intelligently, they give you more money. How many of you receive an email or a letter in the mail from one of your personal credit cards that say, “We’ve raised your credit limit $500 or $5,000?” You didn’t apply for it. They didn’t pull an inquiry. You didn’t justify your income with them. They just gave it to you. It happens all the time. That’s called automatic limit increases. Imagine five to ten business lines of credit that every six months you get a letter like that that says, “We’ve raised your credit limit.” You played the game the way the lenders need you to play to feel safe to give you gobs and gobs of money. That is what we do. Regarding the funding analysis. In every Note CAMP, in every one of Scott’s vehicles, he puts out on market. Scott, mad props to the presence you are when it comes to creating influence and changing people’s lives. I aspire to be a Scott when I grow up. What we offer is what we call a funding analysis. The prerequisite to that analysis is you’ve got to watch our presentation because you’ve got to know what we’re going to be talking about.

In the analysis, we look at your personal credit profile and we review how fundable you are. We grade it right there and I’ll tell you how far away from or close to funding you are, whether it’s going to be $10,000, $20,000, $50,000 or $100,000. We can tell you that in our conversation. It’s a review. It’s not a sales call. You’ll be blown away and we record it in case you want a recording of it because there’s so actionable intel in these analyses. Once you schedule that, you have to watch the presentation so you can get the foundation for what it is we do and how we do it. Then we can look together and see if one of our packages is right for you or if you found enough information to do something on your own.

NCS 357 | Funding Formula

Funding Formula: To play the credit game, you got to learn the rules and then you can win it.

 

Why don’t we talk to them about how and where do they need to go to get one of those?

First of all, Info@ZFunding.com and you can also call 801-438-9090 and speak to my team. We are not a gargantuan operation. You’re going to be talking to my assistant about setting up a profile. If you can fit in my schedule, I will handle it personally. The other person is my Chief Funding Officer. We don’t take this lightly. We don’t train a salesperson to do analyses. We want to know whether or not we want you as a client. Whether or not you have the capacity to do what we need to do because in the last years, $31 million in business credit funding. That should be $90 million if my clients will keep on it and do their part of our process. This is a partnership. We have a done-for-you service but regardless, there are things you need to do. If you do it, the money is waiting at the end of this fall of dominoes. You can go to and ZFunding.com or CreditSense.com, they both end up in the same place. There’s a little box there to schedule a funding analysis. Watch the presentation. Tell Jake, “Merrill said to tell Jake hi.”

We’ll talk about Steph because Steph is using you guys. You have boosted 60 plus points.

She’s over 60 points across all three or higher.

You’re doing some other things and clearing stuff off. You mentioned that a little bit too. There’s oftentimes a lot of stuff on our credit reports that are erroneous. False addresses, old addresses or other things like that, that takes time to be cleared off but that helps boost a lot of stuff as well.

Your identity is so deceptive. People don’t give away their secret sauce so I’ll do it for them. Your identity is the single most powerful part of your fundability. If you’ve got multiple addresses, multiple versions of your names, especially inconsequential or irrelevant employer information. Underwriting these days is about data. If the data points don’t match, you’re not trustworthy. They don’t tell you to do that, but it’s true that if you fixed all your identity pieces, if you fix the credit reporting like the stuff on some of Stephanie’s stuff, we literally cleared off in incongruences between her accounts. Positive accounts but incongruent. You’re more fundable. When we say 60 points, we’re not talking about putting on an authorized user for a twenty-year-old American Express card and your score goes up. We’re talking about fundability. Every point that goes up makes you more fundable to any homes, cars, business lines of credit. I love my clients and I’m deeply committed to making sure everybody wins. Everybody gets the trophy.

We have a question, “How do you protect your business lines of credit from a lawsuit?”

The whole point of a qualified funding entity is it’s an asset protection model. We don’t use your deal entities with your funding entity, but we set up a relationship. We set up what’s called a qualified funding entity and it is an independent entity that is not part of any holding companies. It’s not part of any other organization. We have clients out there with 30 LLCs and they’ve got three properties in each LLC. The funding entity is not one of those. If you don’t pierce the corporate veil, there is no cost for the suit. You’re backstopping the funding entity but it has nothing to do with the source of the lawsuit.

I have a question for you. Here’s a common misconception with a lot of people has to have is that you have to have an LLC in business for two years to start getting bank lines of credit. Is that correct or is that false?

It depends on what you’re going after. Since these trophy lines are the most precious credit instruments out there, you have to be 24 months in business to get the trophy lines. Not the credit cards. We designed the credit card acquisition process to build a business relationship which gets you higher and better credit line. You could also get business loans sooner, but business credit lines are 24 months. We compact that period in a number of ways. We can modify a current entity that’s 24 months or older. An entity is fine if it’s eighteen months because we like to run traffic patterns of six months to prove to the banks that you’re a viable borrower.

There are a number of strategies. We could do it as little as 90 days. You can also use a shelf corporation. Purchase the shelf corporation and that is aged well enough to make it a qualified funding entity. For people with less than perfect credit, don’t be disheartened. If you have less than perfect credit, we can start out with what we call a new company. We age it over the 24 months. If you’re in the 500s, count on two years to be fundable. We can build business banking relationship through every single one of those months. You will be even more of a rock star with a two-year business banking relationship build than a six-month build with someone’s perfect credit because it’s all about data. How much does a bank have, a lender have on you? We tell you how to run money through your check account, use your credit cards, business or personal. We tell you everything on how to create so that you look like the gods of Olympus and goddesses of Olympus on paper.

The beautiful thing too is you guys work with the clients for a while. We’re not talking 30 days or 90 days. You’ll work with people for an extended period of time.

NCS 357 | Funding Formula

Funding Formula: People don’t give away their secret sauce.

 

We guarantee support for a minimum of twelve months or $100,000, whichever is longer. We have clients picking up $150,000, $200,000 in the first six or seven months. We still keep pushing them until they hit that twelve-month mark. If you’re coming from bad credit and it’s a two-year play, we’re with you until you get your first $100,000. $100,000 is not where we stop, it’s where we get to take off the training wheels because you knew how to implement the funding formula. The funding formula is what you do every single time with a new bank. Once you do one, two and three to get to your first $100,000, more, more, more. We have a done-for-you service, but those people are getting funded in 120 days when they have the resources to throw at this. Some of our medium to high net worth clients love being chauffeured around. Proverbially, all we need them for is wet ink signatures and to shake the hand of the bankers that we’ve made appointments with. If we’re not doing it for you, you’ve got to do it for you but we’re right there in your ear. We’re right there supporting you every step of the way, a minimum of $100,000 in true business credit.

You may not know this but Merrill can be a secret weapon for you. He is one of the knowledgeable, one of the smartest guys when it comes to what you’re doing and the best at what you do. That’s why we have you on here. You were sharing a little thing about how you went to a special event and you were the low man on the totem pole though.

I had the privilege of attending FICO World. FICO is the quintessential score, 95% plus of all business decision is made by FICO scoring algorithm. They’ve been building what’s called SBSS, which is Small Business Scoring Service. It’s a FICO service and it’s replacing Paydex. Paydex is last century. That score is worthless and FICO is taking it over. I’ve attended these FICO World conclaves. There are people from everywhere because every banking institution in the world uses FICO. I’m proud to say I’m the smartest man in the room in any room when we’re talking about credit except at FICO Worlds. I’m sitting there. The waiters probably know more than me because they keep hosting the FICO Worlds. These guys are geniuses.

I’ve had the opportunity of sitting down within an informal meeting with Will Lansing, the CEO of FICO. When I told him what our business model was, we make borrowers more fundable so lenders can trust to give them money. He’s like, “Let me have you talk to my score development teams,” and I met with a personal score development team and the business core development team to find out the secret sauce. They NDA me so that I couldn’t give away all the stuff we discussed. I have an NDA with FICO. Our whole point is we come back from every one of these conclaves with more juice, more information to tighten up our optimization process. We have everything necessary to make you a funding entity. Make you bulletproof when it comes to funding.

You guys do an amazing job. I’m proud of what you’re doing. Since you’re helping out there, it has an impact on what we’re doing here as well too. Credit Sense is one of the newest sponsors of The Note Closers Show. Thank you for being a part. Your excitement is contagious, Merrill. You can sense how excited he is. He loves what he does. He loves helping. His whole staff is phenomenal, across the board as well too. Merrill is going to be a regular guest on the show, once a month at least along with some other things. We’ve got some great stuff, some great case studies you’re going to be sharing over time.

We’re going to dive deep every time I’m on. You better read this one first because you’re not going to know where we are in the caverns of credit and business funding in our next episodes.

Go out, email Info@ZFunding.com. They’ll send over somebody over to watch and go from there. They’ll do the credit analysis for you there as well. You can pick up the phone and call them 801-438-9090. You will not be disappointed. Trust me, we had on a money karma coach on talking about people get nervous and upset about it. Don’t do this. Put it down. One the best ways to grow your fundability, go out and raise some capital that’s for your own lines of credit or things like that is to know where you stand. That’s the first step. Trust me, you will not be disappointed. You’ve got an amazing guy to hold your hand up to that first $100,000 no matter how long it takes. I guarantee you that Merrill will standby for when it comes to that. Merrill, thank you so much for being on the show. We’re glad to have you aboard here as a sponsor. We love having you as a friend and an extended part of the note family.

Thank you so much. Call us. Get an analysis. Find out the truth about your situation at least.

We’ll see you later, Merrill.

Be well.

Do yourself a favor. Get on to CreditSense.com or ZFunding.com. Email him. Get an analysis done. You will not be disappointed. Who wouldn’t want to have $100,000 to go buy some notes or grow that to $500,000 in business funds and business lines of credit? You can do a lot of damage when you start having six figures in lines of credit for you. Go out and make something happen. We’ll see all at the top.

 

Important Links

About Merrill Chandler

NCS 357 | Funding FormulaMerrill Chandler, CEO and Chief Strategist at CreditSense.com, has been an influential player in the credit restoration industry for over 21 years, and has co-founded numerous successful credit restoration firms around the country, including Lexington Law. Unsatisfied with the results of credit repair alone, Merrill has used his extensive knowledge of credit reporting and credit profiling to single-handedly invent and dominate the credit profile optimization marketplace.

Since 1997, Merrill and his staff of advisors have assisted real estate investors, business owners, entrepreneurs, and savvy consumers nation-wide to create FUNDABLE Tier 1, and even 800+ credit profiles. Today, CreditSense’s credit profile optimization process has no equal, especially for clients who want to leverage their financial reputations towards wealth and prosperity.

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