Repairing Credit

You have dreams of starting a new business.  To do that you need capital – and unless you can self fund that dream, you’re going to need to apply for a loan.  Some of you (maybe many of you in this economy) may have a problem because of your poor credit history.  A fresh start is possible, but you’ll have to work for it. There is no “quick fix”. First things first – get your FICO score and find out how bad is bad. Your FICO score is what lenders use to determine the amount of credit you do or don’t receive, as well as the interest rate you are charged. I found a good source of information on everything FICO to be at myfico.com.

Next, verify what’s being said about you. Under federal law, you’re entitled to one report per year from each of the three credit reporting agencies: TransUnion, Experian, and Equifax. Scour the reports for errors, and if something looks wrong, dispute it with the credit bureaus. Common errors can include: A person applying for credit under a different name (Robert Jones, Bob Jones, etc.), clerical errors when inputting information off a credit application, and loan payments being applied to the wrong account. If you identify an error, contact the credit agencies immediately (as well as the organization that provided the information) in writing and ask that it be corrected, or possibly deleted.

Now let’s talk about specific things you can do now to start raising your score:

· Pay your bills on time. All of them – all the time. If you’re prone to procrastination or forgetting, most companies will automatically deduct payments from your bank account if you sign up for it.

· If you’re behind on certain accounts, get those caught up. Be aware that paying off a collection account will not remove it immediately from your credit report. It will stay on your report for seven years.

· Keep balances low on credit cards and other revolving lines of credit.

· Pay off debt rather than moving it around. Many credit card companies are trying to entice you to transfer balances to their card by offering low interest rates. You’re better off paying down the existing account.

· Don’t close an account, even if you’ve completely paid off your balance on a card.

· There is a benefit to having multiple accounts, as long as you manage them responsibly and keep the balances low. Instead of overusing one account and building up a large balance, open some new accounts and spread the use over all of them to successfully build your credit history.

If you find that you can’t manage this process on your own, there are plenty of credit counseling agencies out there to assist you. To get your free annual credit reports from TransUnion, Experian, and Equifax, visit www.annualcreditreport.com.

Looking for money?

Cash flow is a constant battle for most small businesses. Today’s tough economic environment doesn’t make it any easier. With the mortgage crisis, home foreclosures, and rising inflation, banks are very hesitant lending money right now. I’m experiencing that firsthand with my own companies, so I’m always on the lookout for alternative sources of cash.

I came across an article in Entrepreneur magazine recently that talked about a website iBank.com that lets you apply online for mortgages, credit cards, lines of credit and small business loans. The site provides users access to 325 different lenders. According to the article, iBank made more than $81 billion in loans to small businesses last year. You can store and organize your business data in a secure, electronic “vault” that you can access any time from anywhere in the world where there’s an internet connection. Whenever you need the cash, you simply select the type of loan you want and the information stored in the vault is automatically entered into your application form. The company that owns iBank claims that borrowing costs are 30% lower than applying for loans the conventional way, and funding time is less, with many loans approved on the spot. Fees to prepare a loan application range from $49.95 to $300, depending on the loan size.

Be aware that I’m not recommending or endorsing iBank for your company because I’ve never used the service myself. I would suggest that if you are in need of funds, it wouldn’t hurt to check this out. If anyone reading this has used iBank before, I would love to get your feedback.