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Some Truth About Credit
Credit is currently and has been historically an integral
component of our economy. Credit contribute a person's net worth,
and financial power. No matter who you are or what type of
business you are considering, credit is a vital component to be
considered when developing your business idea and business
plan.
Your credit history and status will always be a factor when
lenders consider financing your entrepreneurial endeavor. No
matter what type of loan, even loans for those who may struggle
to acquire traditional financing, such as the SBA funded micro
loan, will consider credit as one of the underwriting
factors.
Because your credit history and status greatly impact your
bankability and ability to acquire business funding, it behooves
you to spend a significant amount of time developing and creating
positive credit status and repairing poor credit history.
== personal note ==
When I got married I gifted my wife with a huge debt load and
a toilet level credit status. Through diligence, patience, and
time, I've been able to repair my history and develop credit
status that has allowed us to finance vehicles, mortgage and
refinance homes, and acquire construction financing. So I know
you can repair your credit history and develop positive credit
status but it takes patience, diligence, and a willingness to
reprioritize your financial outlook.
== personal note ==
Now, here is the not-so-secret formula for developing good
credit and repairing poor credit.
1. Time
-- You will need to plan ahead if you want to acquire business
financing. It takes time for bad spots in your credit file to be
removed. It also takes time to engage in the process of having
them removed. You must also spend some time engaging in positive
credit behavior.
2. Diligence
-- You will need to pay very careful attention to your
financial details. If you want to start a business in two years,
you'll need to begin keeping very careful and detail files
concerning all of your credit practices. You'll need to be on top
of payments and purchases you make and always be alert to avoid
behavior that could be detrimental to your credit status.
3. Patience
-- Developing and repairing credit is a process that does not
happen over night. Every time you challenge an item on your
credit report it involves a process that requires patience. Every
time you apply for credit, the application process will require
patience. This goes hand in hand with time; developing good
credit that you can invest in a business idea takes time and
won't happen overnight so be patient. That's why you need to be
passionate about your business idea. It must be able to stand the
test of the financing and credit process.
4. Financial Wisdom
-- You must begin to start making sound financial decisions.
Consider every financial decision you make as if it were
contributing to you becoming a millionaire. Be wary of high
interest commercial credit and instead attempt to acquire lower
interest banking credit such as vehicle loans, mortgages, or home
improvement loans. Consider each purchase you make in light of
it's impact on your credit. If you make a give purchase will it
inhibit you from making a loan payment and reducing debt. Begin
to think in terms of debt reduction and expense reduction as ways
to increase your wealth and credit status. Having less debt is
just as important and financially beneficial as having extra
spendable cash.
In the end, you need to take a long term view concerning
funding and credit as you begin preparing to make your business
dreams come true. It won't happen overnight but if you do it
right and pay attention to the details, such as building sound
credit, it will happen and you'll increase your wealth and
power.
Darrin Coe is a weekly columnist and author of the ebook
"Micro Loans: Finance your dreams available at http://dcoe1.tripod.com/microfinance
contact him at coe@ris.net
MORE RESOURCES:
Credit - Google News
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