MAITRI M.
Personally guaranteed business account reported credit cards
Before signing a contract with LenCred make sure you thoroughly understand the services they are providing. Only then, can you determine if it is your best funding option. There were a few things I regrettably did not understand when I signed: 1. My personal credit background was used to establish business credit. 2. Applying for and using new business credit cards reduced my personal credit score (due to hard inquiries and new debt to credit ratios.) The hard inquiries only impact the score a small amount for a short amount of time. Newly incurred debt negatively impacted my personal score significantly. 2. There is a difference between personal versus business transaction reporting to credit agencies (the scores). Some of my new cards reported to the business credit agencies and some reported to personal credit agencies. 3. I didn't realize my new business credit reported cards were all personally guaranteed. Therefore, if the business goes under I am personally responsible for payment of those cards, and non-payment affects my personal credit score. 4. I didn't fully understand the service I was contracting them to perform. They collected and inputted my financial information in to their algorithms to determine what business credit cards I might be eligible for. They applied for those cards on my behalf. 5. I didn't realize many of the cards would have upfront annual fees (not after 12 months), very short or no 0% promotional offers and high interest rates. 6. Their fees were based on the total amount of credit they were able to secure on my behalf, whether I used the cards or not or even if I closed them immediately due to annual fees or no 0% promo offer. I was approved for multiple cards combined to a very high total credit limit due to my personal FICO score of around 830. Result: I spent a lot of time cancelling credit cards, moving funds from one to the other with better terms, paying balance transfer fees etc. ADVICE: 1. Know what you are getting yourself in to. 2. If there is a way to provide parameters of the cards you would like them to apply for on your behalf and a maximum amount of total credit you would like them to apply for, do that BEFORE they start the application submission process. 3. BE SURE YOU UNDERSTAND: The business credit cards are nearly all secured with your personal guarantee. The "business" credit cards will not protect your personal assets or personal credit score in the case of default. On the positive side, it also won't your personal credit score, in the case of on-time payments. 12/26/2018 UPDATE: I have tried to reply to their response to my review on this site and received no response back. I also emailed my original contacts at the organization with no replies. They stated I had not responded. I hope we are able to connect to discuss my experience. 12/26/2018 Just received a personal email and apology from LenCred's management for not seeing my reply on this site. We will arrange a phone conversation soon to see if we can resolve this matter. 1/18/2019 After exchanging several emails and two personal calls with LenCred’s upper management, we were able to come to a clear, easy and fair solution. During the resolution process I experienced excellent educational and customer service. I am very pleased that my original financial goal of establishing business credit has been attained, my personal credit score is on the rise and my business will have access to working capital in the future, if needed. I am adjusting my rating from 1 star to 3 stars because it was ultimately handled well, but took a year to resolve "Average - acceptable experience but with some friction."
Response from LenCredDec 26, 2018
Maitri, Thank you for reaching out. You spent a lot of time crafting the post. However, in a search of our database, we do not have your record on file. Therefore, we would love to speak to you on this matter. Could you please send us your contact information? As soon as we receive that we will hop on the phone with you. We are more than willing to speak to you around any confusion you may have had with whatever funding plan we assisted you with. From what it sounds like you were not coached on the funding products you received. We do things such as record 100% of our inbound and outbound calls so we can review them in cases like this. We have our operations dept who administers compliance calls after someone gets matched with a funding plan by our sales team. This helps to ensure things like this don't happen. We also have a pretty clear contract that outlines the important aspects of each of our different funding solutions. The purpose of all this along with having good people is to avoid situations like the one you've described. We would just like to figure out if you used a different name, have a partner who is in our database, or how we can locate you in our system so we can do some research and help to uncover where things might have gone wrong for you. Additionally, when we use our data-driven algorithm to match small businesses with different credit card solutions we actually track the impact that those inquiries have on their FICO scores. We've seen, for example, that when someone goes after $50,000 or more in unsecured lines of credit through our matched lender network that there's a 3.9% chance that they could see their FICO scores drop by 30 or more points but we've never seen anywhere close the the drop you're describing. Nearly all of those clients who saw 25+ point drops in their FICO scores were people who had less developed credit files with less than 10 open tradelines. So we'd really like to dig into your unfortunate situation and understand where it could have gone so wrong. On the flip side of that there's a 5.8% chance that our clients' FICO scores will actually increase since we've learned a lot over the years and have a lot of data to develop our funding plans in a way that actually improves some of our clients' FICO scores. Furthermore, there's a 17.4% chance that our clients will see either an increase in their FICO scores or a zero impact - meaning the score does not change at all - when we utilize one of our business and personal credit card solutions for a startup or lower revenue company. We go to great lengths to take a fiduciary interest in the credit health of our clients so I hope we can get to the bottom of what happened for you. Let us know when you can speak so we can walk through any issue you have with the funding solution we matched you with. Thank you, Phil Director of Funding Operations 12/26/2018 UPDATE - as of this time we have not heard back from this business owner. Unfortunately we have not been able to bring resolution to this matter yet.