Credit Clean Up

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The First Steps to Building Stronger Credit!

The First Steps to Building Stronger Credit!


bullet NEVER allow overdrafts (NSF's) on your business checking account--they can be the "kiss of (credit) death!"  Work out overdraft or other account protections with your bank.
bulletMaintain the business credit that you already have.  Adhere to all repayment terms.  Negotiate and make timely partial payments if you must.
bulletTry to work with at least some larger vendors--who are more likely to report your credit (Lack of reliable business credit is one reason underwriters depend so heavily on the principal's personal credit.)
bulletBuild your good business credit.  Use larger cash deposits to encourage vendors to extend credit on the balance of larger purchases. 
bulletBusiness checking account balances should reflect adequate cash for day-to-day operations (of a like-size company) as well as enough to make reasonable payments on the equipment you are considering.  (particularly for the 90 days preceding your application)
bulletEverybody's (personal) credit counts. In most closely held companies, anyone with a 10% (or greater) ownership interest will have their credit reviewed prior to credit being extended. On the principal's credit:
bulletWatch those revolving balances. The amount of credit available ("high credit" and used ("the current balance") is one of the first things looked at.  Being "maxed out" (and about to hit the wall) is a no-no, even if everything is "current."
bulletMinimize credit inquiries--Every inquiry shows up on your credit report and stays there.  (Too much) shopping for credit can "suggest" several things to an underwriter--you are desperate, "the other guys" turned you down (why??), maybe you're trying to borrow against the same equipment twice.  The list goes on and on.  Don't do it.

Personal Credit Clean-up Pointers

bulletIdentify and promptly investigate any inaccurate credit history and insist that it be removed.
bulletResolve judgments, liens, past due, "collection" and "charge-off" accounts on both your business and personal records.  Negotiate settlement and/or pay them in full if you have to!
bulletSettle outstanding disputes.  "Standing on your principals" may make you "feel" good...but it won't do much for your credit!
bulletPay and/or negotiate student loans and back child support--creditors know that these obligations won't just go away and will take legal precedence over your obligations to them.
bulletMake every effort to pay your bills on time and within the suppliers' terms--particularly during the 12 months preceding any request for credit. 
bulletBe prepared to explain credit problems--its not unusual to be asked!  Still,  a creditor may, or may not "buy" your explanations.  Be ready to explain and/or supply comments/ explanations for derogatory data when there are extraordinary and/or mitigating circumstances.  Most credit reporting companies will attach such brief "explanations" to your file on your behalf

Establishing/Re-establishing Personal Credit:

bulletApply for credit with a local retailer such as a department store
bulletAdhere to all creditors' repayment termsIf you can't, negotiate and make timely partial payments on all obligations.
bulletApply for one of the "deposit secured" credit card programs to demonstrate your ability to meet new revolving obligations
bulletApply for a small loan at a bank or credit union where you have checking and savings account

Beware Of "Quick Fixes"

There are no "easy answers" for those who want to remove  "less than flattering," but accurate, blemishes!  We would also counsel you be very skeptical about anyone purporting to offer so called instant "credit cleansing" services


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