Understanding Your Credit Score Part One

Payment History

The three major Credit Bureaus: Equifax, Experian, and TransUnion, all work off of a similar scoring system. This system is based on a singular postulation: will you become 90 days late in the next 2 years? The scoring system they all use, (with minute variables) can be broken down into 5 categories; or 5 pieces of a pie. I will discuss the first part of that credit pie today.

Your payment history is the largest aspect of your credit score, as you might expect. In total, your pay history accounts for 35% of your total score. This portion of your total score calculation is based on your prior payment history with your creditors. Late payments, defaulted accounts, bankruptcies, and all other NEGATIVE information on your credit report have the greatest effect. The more recent the late payment, the greater the damage is to your credit score. If you go late on your mortgage this month, the Mortgage Industry Option scoring model could drop your scores over 120 points. That is with only one 30 day late payment!

What’s Your Score? Find Out Before it’s too Late!

What’s Your Credit Score?

It’s easy to ignore the problems that are created by a low credit rating.  Thinking about your credit history isn’t something many people do every day. At some point it will become obvious that the poor credit score is stopping you from moving forward. For most, the moment of understanding comes when it is time to make a big purchase, like purchase a home or a car.

Having a bad credit score makes it very hard to obtain a loan.  Even if your score is somewhat decent and you can get approved, your will likely pay much higher interest rates.  It may not seem like an additional 2% in interest will result in much, until you do the math.  A mere 2% higher interest rate will result in thousands of extra dollars spent.

The first thing that you need to do in order to begin raising your score is to pull copies of your credit files and scores.  You can do that by visiting Credit Viper.

What the credit bureaus don’t want you to know

The Adversarial Nature of the Credit Bureaus

 

 

Its sad but its true.  Every day across the United States a business owner, like yourself, is turned down for an Unsecured Business Line Of Credit, a Business Credit Card or a Business Loan because of a blemish on their credit -a blemish that might not even be your fault!

 

Most people with bad credit arent deadbeats trying to avoid their bills, so why are they suffering the same embarrassment as the people who are? Its not fair. Sometimes things happen that we have absolutely no control over, but we still have to live with them. Fortunately, theres hope. If you know how the credit system works you can learn how to make it work for you. Can you imagine being able to make what is unofficially the most powerful system in the country work for you? If you know the secrets, you can do precisely that.

Peer-To-Peer Lending

Recently I had a good friend call me for some financial advice about credit card debt.  I’m not going to try and claim that I’m a certified financial planner, but I’m not afraid to offer my financial opinion.  My friend has run into a situation that has become very common place among many Americans, mounting credit card bills.  He was specifically wondering if there was an easy way to lower his interest rate and begin paying down the balance after his bank didn’t have any solutions.  I suggested taking a friendly approach to financing and brought up peer-to-peer lending.

Alternative Lending Sources

What is the proper measure for creditworthiness in this day and age?

Apparently, it is no longer simply the credit report or the verdict of one’s local banking institution. There are so many individuals who fall short of traditional standards of creditworthiness that the marketplace has naturally made room for non-traditional lenders. Besides the controversial subprime mortgage lending industry that most people are by now familiar with, there is a increasung trend in person-to-person lending organizations. Websites like Prosper.com facilitate lending transactions between individuals and other single or small group benefactors. Using such a service empowers people who may not otherwise receive loan funding to finance their dreams and goals.

Free Link!

Today I’m simply going to give you something for free that should have an immediate impact on your business well being.  Go to:   http://thesmallbizcollege.com/freeaccess.php.  This is a website I created to assist small biz owners in their endeavors.  I have over 600 people that have paid membership dues for access so “consider yourself lucky”.

You are welcome to give access to this site to any and all of your friends and business associates.  This free link will only work until August 10, 2009.

The FACTS About Your Credit

Important information about your credit

As an adult almost everything you do revolves around your credit.  Your ability to purchase a home, a car, a big screen TV.  It also affects your insurance rates, renting your apartment and even getting a job.  Heck, besides marrying my wife for her sheer inner and outer beauty, the next biggest thing that attracted me to her was her credit.  YES, that’s right!!!  It was that important she handled her finances how I did and was one of the first questions I asked her.  We laugh about it now but it caused a definite stir in the beginning.  So lets talk about credit.

First there are 5 things that are factored into the algorithm used to calculate credit.  They are:

* Payment history
* Amounts owed
* Length of credit history
* New credit
* Type of credit used

Is the Economy Right to Start a Small Business?

Timing Timing Timing

If you are thinking about starting a small business now is as good of time as any even with the current state of the {financial crisis|economy}. Now why is this you might be asking yourself? If money is so bad for everyone what is going to make the want to come out and buy from you? Read on to see that the urge to start your own small business is a very savvy thing to do even in hard economical times.

Any successful small business venture is going to need a very quality and well written business plan. If you do not have a solid Small Business Plan in place they you are setting yourself and your business up for failure. When you are starting your own business you not only want to find something that you love you want to be able to fill a niche product that is going to help make your business stand out from the crowd.

How HELOCS’s can affect your credit

Make HELOCs work for you

Today we’re going to discuss how a HELOC (Home Equity Line of Credit) can negatively impact your credit.  Odds are some of you out there have tapped into the equity in your home to finance your business endeavors.  Quick and easy right?  Yes, but it may have devastating effects on your personal credit.  You’ve done everything you’re supposed to, paid on time, and have no clue why your score went south.  Here’s why:

30% of your personal credit score is made up of how much of your credit has been utilized.  Of particular importance to a lender is the percentage of your revolving you have used.  When that number exceeds 30% your scores can suffer.  When that number exceeds 50% your scores can plummet.  Sometimes by as much as 50 points for a single occurrence.

Standing on shoulders — how great is your business?

Learning experiences

My best business lessons come from my clients. Central among these lessons is that good businesses make money, but great businesses build communities that make good business possible. “Great businesses” doesn’t mean only big public corporations. Private businesses are not only the foundation of our economy – they are essential to civic infrastructure. No other group of community leaders brings to bear the skills and entrepreneurial drive of the man or woman who owns a business.

A company that invests in its community not just money, but the talent and passion of its people, especially its owners, positions itself to move from being a success to being significant. “Being a good corporate citizen is good for business. Companies that give by donating money, products and services or volunteer time gain recognition by supporting their communities. Corporate giving can increase your company’s visibility, reputation for goodwill and employees’ sense of purpose.” — The Denver Office of Strategic Partnership’s Business Good Citizenship Kit.