What is Clean Credit?

The Equipment Leasing Experts -- Our 35th Year!




Equipment Leasing For 
Start-Ups, New Businesses & All Businesses

What is "Clean Credit?" Tips from the pro's.

(Just FYI: The average FICO score in the U.S. in 2018 was 704 - Now that covers a lot of age groups and a lot of financial circumstances, BUT the average was still 704)

We have very few rules that are "cast in stone."
Although the following
guidelines are important for most First Capital equipment leasing programs, start-up and new business programs often have their own special requirements.  General guidelines for "clean personal credit" appear below as well:

Extending Credit
The decision to extend credit to Start-Ups and New Businesses will rely heavily on the financial strength and demonstrated ability to manage credit of each of the principals (owners of 10% or more) of the entity seeking lease financing. 

Credit Based Criteria
Start-up and new business leasing in particular, is a "credit-based" decision (as opposed to asset based).  The "idea," the business plan, projections and the value of the equipment are all considerations in an approval, but none will outweigh the importance of the principal's credit.  As the business doesn't have any "credit," the only credit left to consider is that of the owners.

We are not "investors."
We are not venture capitalists, nor are we looking for equity or any participation in the "upside" of your project's success.  Our only interest is in the timely repayment of the lease and hopefully an opportunity to fund your business' future growth & expansion!  If the deal falls apart at any point, for any reason and we have to recover overdue payments and/or recover your used equipment, the total transactions is almost certainly a NET LOSS for the leasing company. 

What Is "Clean Credit?" (Start-Ups & All Businesses)

bullet Personal Credit Bureau Report Characteristics that will be considered:
Minimum Score 600 (650 is better, 700+ is where you "want" to be)
No slow pays during the previous 12 months (or VERY GOOD explanations)
No Unpaid Charge Offs (or VERY GOOD explanations)
- No Unpaid Collection Accounts (or VERY GOOD explanations)
At least 7 "trade lines" (accounts on you credit bureau)
Oldest credit account on your bureau at least 3 years
"Availability" of credit is important. Greater than 50% is good  (Being "maxed out" is a significant red flag)
bullet Recent Inquires - Less than 10 in the previous 12 months.  (Don't "shop" your lease to death, you'll end up being turned down automatically, by everyone!  We see this everyday)
bullet Bank Reference (business or personal account for start-ups) that show a 3 month history as follows:
- Lease amount up to $20,000: The average bank balance should be at least 4-figures (low)
- Lease amount up to $30,000: The average bank balance should be at least 4-figures (medium)

bullet Bank Account should be "in good standing" with NO NSF's (or VERY GOOD explanations)
bullet Comparable Debt Can you show a track record of repaying a debt comparable to amount you are requesting?  (A big plus)
bullet No Personal Bankruptcy (especially for start-up or new businesses).
bullet Revolving Debt (credit & other charge accounts) should be less than $25,000
bullet New Debt.  Too much "new debt" within the previous 12 months adds risk to the current transaction and is a negative.
bullet No Open Tax Liens or Unsatisfied Judgments (A GIANT RED FLAG--your assets may be subject to seizure at any time-clean this up, workout a payment plan or settlement.)
bullet No Child Support Defaults (your assets may be subject to seizure at any time)
bullet No Student Loan Defaults  (your assets may be subject to seizure at any time)

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Other credit considerations:

bulletHomeowner (a big plus)
bullet Co-signer! -- Can you bring a stronger co-signor to the transaction?  Don't be shy about asking close friends or relatives--it may be the difference between an approval or a decline!   (This is a  big plus for marginal transactions, it is of NO USE if the principal is significantly below the standards outline above)  

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