Google

Some Truth About Credit


Credit is currently and has been historically an integral component of our economy. Credit contribute a person's net worth, and financial power. No matter who you are or what type of business you are considering, credit is a vital component to be considered when developing your business idea and business plan.

Your credit history and status will always be a factor when lenders consider financing your entrepreneurial endeavor. No matter what type of loan, even loans for those who may struggle to acquire traditional financing, such as the SBA funded micro loan, will consider credit as one of the underwriting factors.

Because your credit history and status greatly impact your bankability and ability to acquire business funding, it behooves you to spend a significant amount of time developing and creating positive credit status and repairing poor credit history.

== personal note ==

When I got married I gifted my wife with a huge debt load and a toilet level credit status. Through diligence, patience, and time, I've been able to repair my history and develop credit status that has allowed us to finance vehicles, mortgage and refinance homes, and acquire construction financing. So I know you can repair your credit history and develop positive credit status but it takes patience, diligence, and a willingness to reprioritize your financial outlook.

== personal note ==

Now, here is the not-so-secret formula for developing good credit and repairing poor credit.

1. Time

-- You will need to plan ahead if you want to acquire business financing. It takes time for bad spots in your credit file to be removed. It also takes time to engage in the process of having them removed. You must also spend some time engaging in positive credit behavior.

2. Diligence

-- You will need to pay very careful attention to your financial details. If you want to start a business in two years, you'll need to begin keeping very careful and detail files concerning all of your credit practices. You'll need to be on top of payments and purchases you make and always be alert to avoid behavior that could be detrimental to your credit status.

3. Patience

-- Developing and repairing credit is a process that does not happen over night. Every time you challenge an item on your credit report it involves a process that requires patience. Every time you apply for credit, the application process will require patience. This goes hand in hand with time; developing good credit that you can invest in a business idea takes time and won't happen overnight so be patient. That's why you need to be passionate about your business idea. It must be able to stand the test of the financing and credit process.

4. Financial Wisdom

-- You must begin to start making sound financial decisions. Consider every financial decision you make as if it were contributing to you becoming a millionaire. Be wary of high interest commercial credit and instead attempt to acquire lower interest banking credit such as vehicle loans, mortgages, or home improvement loans. Consider each purchase you make in light of it's impact on your credit. If you make a give purchase will it inhibit you from making a loan payment and reducing debt. Begin to think in terms of debt reduction and expense reduction as ways to increase your wealth and credit status. Having less debt is just as important and financially beneficial as having extra spendable cash.

In the end, you need to take a long term view concerning funding and credit as you begin preparing to make your business dreams come true. It won't happen overnight but if you do it right and pay attention to the details, such as building sound credit, it will happen and you'll increase your wealth and power.

Darrin Coe is a weekly columnist and author of the ebook "Micro Loans: Finance your dreams available at http://dcoe1.tripod.com/microfinance contact him at coe@ris.net

MORE RESOURCES:

RELATED ARTICLES

First Major Regulatory and Legislative Victory of 2005 for Creditors and Consumers
Under the Fair Debt Collection Practices Act, collectors are not allowed to disclose a consumers past due debt to anyone other than the debtor and in some cases a spouse. The Telephone Consumer Protection Act would have required collectors to identify the registered name of their business in any pre-recorded messages to consumers or debtors.
Credit Counseling: Is it Really Necessary?
Not everyone has a positive experience with credit counseling. Potential creditors often frown upon consumers who are going through credit counseling, denying them credit or sticking them with elevated interest rates on new lines of credit.
Avoiding Credit Card Traps
The next time you open your credit card statement, take a closer look at the small insert titled "changes to your credit card agreement". You know the one I'm speaking about.
Small Business Credit Cards
So what do you look for when applying for a credit card for your small business? One thing is for sure, wasting money isn't an option because it can make or break your business. Things to look for are low interest rates and good customer service.
Low Interest Credit Cards Have Many Advantages
When credit cards are used wisely they can be very beneficial to the consumer. A low interest credit card can be exceptionally beneficial.
Everything You Always Wanted To Know About Your Credit Report
Your credit report is a very powerful report that essential controls what you can and cannot do in your life. Unfortunately many people aren't aware of what a credit report actually is and what information is contained on the report.
10 Ways of Reducing the Risk of Identity Theft
1- Check your credit report regularly2- Secure personal information in your home, especially if you have roommates, employ outside help, or are having work done in your home.3- minimize the amount of information someone can steal, do not carry extra credit cards, your Social Security card, birth certificate or passport in your wallet or purse, except when needed.
Like It Or Not, You Have A Score To Settle!
Like It Or Not, You Have A Score To Settle! (Part 1 of 2 on Credit Scoring)Just when most people finish with school and can stop worrying about test scores, there's a new kind of scoring that enters the picture. It's called credit scoring.
What You Need to Know about Debt Negotiation on Credit Cards
Debt negotiation on credit cards is often referred to as credit card debt settlement. Whenever you make a credit card payment- or even pay your utility bills- it usually gets reported to one- or all- of the three main credit agencies.
Lower Your Credit Card Interest Rate Now!
With today's credit card companies, there are many opportunities to get your cards rate of 21% or more reduced. The higher the amount of interest your card charges will cost you more for a simple purchase and ultimately may take you years to pay off instead of months, should you make the minimum payment allowed.
Protect Yourself Against Identity Theft
Identity theft is when someone uses, without permission, your personal information in order to commit any frauds or crimes. Identity theft is a felony that is becoming more and more common.
Why Should You Use Credit Cards
Believe it or not, the way society, especially the commercial side, is set up these days, the only alternative to using credit is to pay cash for everything. But it's actually quite hard to do that.
A Cure for an Ailing Credit
Credit has become a much-used word, thanks to the various connotations that it is being used in. Transactions in which the payment is deferred to the near future are termed as credit transactions.
Credit Counseling Basics
Credit counseling is an option you might want to consider if you are having financial problems. The stress can be overwhelming when you have creditors calling you daily to collect money that you simply don't have.
New Law Provides Free Annual Credit Report
As of Thursday, December 1, 2004, one-third of Americans will be able to access their credit reports from all three main agencies for free. Passed in late 2003, the Fair & Accurate Credit Transactions Act creates a central source consumers can use to obtain a free annual credit report.
3 Ways to Improve Your Credit Score by 50 Points In Less Than 30 Days
In Less Than 30 Days. "What can you do to increase that set of three numbers on your credit report that can be so important with your financing?" I came across this question as I was surfing discussion groups the other day.
Credit Establishment 101
There will come a day when you need credit. You may want to buy a home or a car and your credit rating will become very important to help make these dreams come true.
What is the Check 21 Act?
Check 21 is the common name for the Check Clearing for the 21st Century Act. It's new legislation that was recently passed by congress and made a law when signed by the President of the United States (remember "I'm just a bill" from Saturday morning cartoons).
Understanding the Process of Credit Counseling
Many of us have seen the advertisements on television. "Get out of debt fast!" "We can solve all your credit problems with only one call!" These sound really great but you know that, realistically, one call is not going to solve your credit problems.
Bad Credit Credit Cards
Chances are you've gotten your share of offers like this in the mail Bad Credit Credit Card, Bad Credit Visa Cards and Credit Cards for People With Bad Credit. Re-establish your credit with a bad credit credit card, credit cards for people with bad credit or pre-approved Visa cards regardless of your bad credit history, some with low introductory rates and other perks.