"Options for Poor Credit or Weak Financials
You have your business idea. You are excited about the future and all the possibilities that exist for you as an entrepreneur. As you begin to plan, however, you cannot seem to avoid one big roadblock: your credit history! While business advice is plentiful, you are not sure if your weak financial history puts you in the running for loans, credit cards, money from investors. Are you out in the cold? Are your business aspirations doomed to failure? Not necessarily.
Getting a Copy of Your Credit Report
First, face the beast. Order a copy of your credit report to find out the facts. There are some websites that can help you to obtain your credit information. Try one of the following: Experian (www.experian.com), Trans Union (www.tuc.com), or Equifax (www.equifax.com). All of these function in a similar way: the cost is generally $8.50 per credit report unless you have been turned down for credit in the past 60 days (in which case the report is free). In some states, you are entitled to one free credit report each year. These include: Colorado, Maryland, Massachusetts, New Jersey, and Vermont. In Georgia, you are allowed two free credit reports each year.
Each of the three companies cited above gives a slightly different credit report and so it can be difficult to know which one to order. In response, Credit 411 (a financial service) will give you all three for one low price. In addition to the 3-agency credit report, you will also receive a summary of your credit rights under the Fair Credit Reporting Act, information you will need to dispute any inaccuracies on your credit report, and unlimited toll-free customer service from certified credit specialists who can help you with questions or with your credit dispute. The cost is $29.95. For more information, check out: www.credit411.com.
Your Credit Score or Number
There is a mysterious "credit score" that is assigned to you based upon your history. According to popular legend, it is impossible for you to ever find out what your score truly is and how it is figured. Interestingly, Trans Union claims they will be able to give you this score by year's end. Everyone else gives you advice on how to bring your score up (the higher the better). Factors that are considered in determining your credit score include: income, educational level (the higher, the better), how frequently you move your residence (the less often, the better), how often you change jobs (the less often, the better), the number of credit cards you have (the fewer, the better), whether your payments have been on time, what you spend your money on, how close you are to your credit limit, and how many cash advances you have taken. Consider these factors when trying to clean up a bad credit history.
If ordering your credit report has verified that your financials are weak and the factors used to determine your credit score do not work in your favor, consider other options. For example, contact a credit counselor (check out Consumer Credit Counseling) or start saving as much money as you can now so that you can show potential lenders that you have money to invest in yourself. Home ownership and having a retirement plan from a previous job are also helpful because banks will typically ask for such things as collateral for a loan. One site to check out for funding (even with a less than ideal credit history) is Count-Me-In (www.count-me-in.org). They offer loans from $500 to $10,000 (first-time borrowers can only apply for a maximum of $5,000).
Other sites to check out include:
|