Not every customer walks through your doors with perfect credit, but that doesn’t mean the sale has to walk out with them. Many consumers get denied by prime lenders, leaving both the customer and retailer frustrated.
Understanding how retail financing options work can help maximize your sales potential and serve more customers. One such important concept is the “waterfall” model in finance. This approach is particularly valuable for retailers looking to approve more customers, especially those with less-than-prime credit scores. A TransUnion report released in 2025 estimates that there are about 39 million Americans with subprime credit, so there are a lot of opportunities to say yes to more customers with waterfall financing.
What Is a Waterfall in Finance?
In retail financing, a waterfall model refers to a multi-lender approach where a customer’s credit application flows through a sequence of financing providers until it finds approval or reaches the end of the sequence.
How a Financing Waterfall Works
When a customer applies for financing at your store, their application typically moves through a tiered process designed to increase the chances of approval:
- Step 1: The application is first reviewed by a prime lender.
- Step 2: If the prime lender declines, the application is automatically passed to a second look financing provider with no extra steps or new applications needed.
- Step 3: If the second look provider declines, customers may be directed to tertiary financing products.
This process happens seamlessly in the background, often in seconds, providing customers with a smooth experience while maximizing approval rates.
Waterfall Financial Model Example
When you partner with a second look provider like Fortiva Retail Credit, here’s how a typical waterfall model can unfold in your store:
- A customer applies for financing to purchase a $1,000 washer/dryer set they need after their old units stopped working.
- The prime lender declines the application due to the customer’s credit profile.
- The application cascades to Fortiva Retail Credit, which evaluates alternative data points, allowing Fortiva Retail Credit to go deeper in the underwriting process beyond FICO scores.
- The customer is approved for financing with manageable terms, completing the purchase without needing to reapply.
This process ensures a seamless customer experience while retailers capture sales that might otherwise be lost.
Benefits of Waterfall Financing for Retailers
Implementing a waterfall approach offers several advantages:
- Higher approval rates: Customers are evaluated through an alternative process, in turn potentially saving the sale.
- Seamless customer experience: Customers receive quick decisions without reapplying.
- Increased sales: Convert more browsers into buyers by offering financing options for various credit profiles.
- Larger average purchases: Customers typically spend more when financing is easily available.
- Enhanced customer loyalty: Providing financing solutions builds stronger customer relationships.
How Fortiva Retail Credit Enhances the Waterfall Model
At Fortiva Retail Credit, we do more than join your financing waterfall—we help make it work harder for you.
Here’s how:
- Broad customer reach: We specialize in consumers with less-than-prime credit scores—a largely underserved yet high-intent group.
- Frictionless integration: Our platform integrates easily into your existing online and in-store POS systems.
- Tech-enabled approvals: We leverage our proprietary underwriting technology platform-not just credit scores-to approve more customers
- Real-time decisions: No long wait times. Most customers receive a decision in seconds.
With Fortiva Retail Credit in your waterfall, you’re positioned to acquire customers others miss, boosting both approvals and customer satisfaction.
A Look at the Financial Potential
Let’s say your business sees 1,000 financing applications per month.
- Without a waterfall financing program: 60% approved = 600 purchases
- With a waterfall (and second look) financing program: 85% approved = 850 purchases.
Assuming an average ticket size of $800, that’s an extra $200,000 in monthly sales just by adding a second look lender like Fortiva Retail Credit to your waterfall.
And those additional 250 customers? They’re now part of your marketing database, loyalty program, and referral network.
Implementing a Waterfall Strategy in Your Retail Business
To maximize your sales potential through a financing waterfall, consider these steps:
- Evaluate your current financing program. Identify approval rates and potentially lost sales.
- Review your customer base. Understand the credit profile distribution of your customers.
- Select complementary lending partners. Choose providers that specialize in different credit segments.
- Implement seamless technology integration. Ensure a smooth application flow between providers.
- Train staff appropriately. Employees should understand how to present financing options without stigmatizing second look approvals.
- Monitor performance metrics. Track approval rates, average purchase sizes, and customer satisfaction.
Empathy for Your Customers, Support For Your Business
Many of your customers work hard, pay bills, and want to buy responsibly but may have a limited credit history or one-time hiccup that dropped their score. When they visit a retailer looking to acquire the products they need for their homes, they need flexible financing solutions.
With a waterfall model that includes second look financing, you’re saying yes to:
- Empowering more consumers to make the purchases they need
- Completing sales that would otherwise be lost
- Providing financing when customers need it the most
When your financing experience is more inclusive, customers remember, and they return.
Why Fortiva Retail Credit?
Here’s what sets us apart:
- 29 years of experience serving consumers with less-than-prime credit profiles
- The largest and only publicly traded servicer for second look credit
- Proprietary decisioning technology that looks beyond traditional credit scoring
- Omnichannel compatibility so your customers are presented credit where they shop, in-store, online, and mobile
- Compliance-ready and secure platform for peace of mind
We’re not just another financing provider—we’re your long-term partner.
Unlock Your Untapped Market Potential
If your current financing setup ends at “no,” it’s time to rethink what’s possible. The waterfall approach to retail financing—powered by Fortiva Retail Credit—can help you approve more customers, increase sales, and build lasting customer relationships, all while maintaining a seamless shopping experience.
Contact us today to share information about your business and discover how Fortiva Retail Credit’s second look financing solutions can complete your waterfall strategy. Our team will be in touch to discuss our expanded customized financing options.