All Articles Tagged "credit rating"
Numbers Game: How Your Credit Score Can Affect Your Startup Financing
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Add your credit score to the list of important numbers — Social Security number, phone number, anniversary — that you should know and keep handy.
In order to get a business loan or a line of credit, you don’t have to have perfect credit. But, writes personal finance expert Michael Germanovsky in Yahoo Small Business Advisor, the better your credit history the better your chances to obtain startup financing.
First, find out what your personal credit score is. “Many emerging entrepreneurs mistakenly believe that by registering a corporation they can obtain a credit by only using their new business tax ID. It is not entirely so. To establish your eligibility, the bank will calculate a credit score by using your personal social security number,” explains Germanovsky. So it is best if you know what that is before hitting the bank.
Your credit, or FICO, score is calculated in various ways. According to FICO, “The FICO Score is calculated from several different pieces of credit data in your credit report…Your FICO Score considers both positive and negative information in your credit report. Late payments will lower your FICO Score, but establishing or re-establishing a good track record of making payments on time will raise your score.”
Banks usually perform these calculations, but you can figure out your score as well for free with MSN.
All is not lost; you can improve credit score, says Germanovsky.
Although your credit score is not the same as the credit rating you received from the credit bureaus – Equifax, Experian, Transunion – your score is affected by your credit history. “While a lender may consider your assets and equity stakes, your debt repayment habits determine not only the size and type of loan or credit extension you may receive, but also the percentage rate as well,” writes Germanovsky.
Shop Around: How To Get The Best Deal On A Home Loan
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Applying for a home loan can be overwhelming — what with the paperwork, credit requirements, terms and other banking jargon. But don’t be deterred. Just as you would comparison shop for any big-ticket purchase, do the same when it coms to loans. Various banks will offer you different rates and terms. Select the one that’s best for your financial situation.
There are the things you should do before going shopping, according to Charon D. Darris, VP and senior business banker for New York City’s, KeyBank Corp. “Know your credit scores and credit reports,” he said in an email. The three credit rating services are Experian, TransUnion, and Equifax. “These reports and scores can differ from company to company. It’s important you pull all three to ensure you have a comprehensive picture of your full credit profile and can proactively address any discrepancies you may uncover.”
Darris suggests using “an online mortgage calculator” to first do your calculations at home. “Most banks have a section of their website that will estimate what size loan you can handle given your income, property taxes, and other deductions,” he explains.
And before you hit the major banks, consider the smaller institutions. “Start with community banks. Often people start with the big names like Chase, Bank of America and Citi. However, underwriting standards and pricing are likely to be more negotiable at smaller financial institution,” advises Darris.
Now you’re ready to shop around. Here are a few tips from Darris on what you should ask each bank.
• Will you cover my closing fees? And if not, do you have a cap on closing fees?
• What is maximum tenor will you provide for my loan? (Tenor is the length of time until a loan is due.)
• What is the minimum down payment I will need to provide and when do I need it?
• Would an additional guarantor help the bank be more comfortable?
• Are there any government programs I qualify for?
Armed with knowledge, you’re ready to haggle for the best deal.
6 Tips for a Top Notch Credit Score
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When it comes to assessing your financial fitness, your credit score is one of the single most important numbers you have, right up there with your bank account. Your credit score is a number between 300-850 that gives lenders a quick glimpse into how responsible you’ve been in your financial life.
Your credit score is determined by looking at:
- Your payment history;
- How much credit you have (and how much of it you use);
- What kinds of credit you have,
- How long you’ve been using credit and
- How much new credit you’re applying for.
All of this data is aggregated by three credit bureaus (Equifax, Experian and TransUnion) and is used to dictate whether you can get a car loan, mortgage, credit card or apartment to rent.
While few have a perfect 850 credit score (and you don’t really need one anyway), aiming for a credit score above 700 or so is a wise move to make sure you can borrow money (and do so without paying a fortune in interest).
So, if your credit score isn’t there yet or if you want to aim for a higher number for the best possible rates, here are six tips to get you started.
District's Credit Outlook Downgraded
(Washington Examiner) — Wall Street delivered a warning shot to the District on Tuesday by downgrading the city’s financial outlook. Moody’s Investors Service and Fitch Ratings cut the city’s credit outlook from stable to negative, meaning that if the city’s finances don’t start improving, its credit rating could be downgraded next year. A credit downgrade would make it more expensive for the city to borrow money and taxpayers would likely carry that burden.
Be Wary of 'Credit Correction' Companies
(LATimes.com) – A couple who ran up about $100,000 on a dozen credit cards paid a Tehachapi firm $1,000 upfront but haven’t seen any progress in half a year.
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Clearly the Rademans got in over their heads through a combination of mistakes and misfortune. In hindsight, they readily acknowledge that running up massive bills on multiple credit cards was a dangerous thing to do.
But consumer advocates and state officials say the Rademans made a bad situation worse by paying $1,000 upfront for a credit counseling service, with no real promise of action in return.
Getting a Loan After Bankruptcy is Tougher, but Possible
(LATimes.com) — Dear Karen: I declared bankruptcy a few years ago.
Now I have a new business. Can I get a business loan?
Answer: The bankruptcy will affect your credit rating for at least seven years. But you may get a loan before then if your company is profitable, said Bob Seiwert, a senior vice president at the American Bankers Assn.
