Business Planning Help

Good business planning has to include a discussion of your credit. To give yourself every opportunity for a suitable business loan, your credit MUST be in order – GOOD order.

Any lender/investor is going to check your credit history and score before even considering lending you or your business any of their money, so you should do the same.

Mistakes happen - companies don’t always report to the credit bureaus when you’ve fulfilled your obligations to them, etc. That last one can be a double whammy to your credit because not only do you have what appears to be excessive debt, you also appear to be a deadbeat – one who doesn’t pay their bills – because those debts will likely appear to be old! It’s critical for you to know what your potential lenders will see when they look up your record. It’s also gives you a chance to fix anything on your credit report that needs “fixing”, or to be prepared to explain those situations. (TIP: fixing trumps explaining!)

First and foremost, you must keep your word when agreeing to acquire anything on credit. That means PAY YOUR BILLS WHEN THEY’RE DUE! If you see yourself developing a problem in that area, you MUST discuss the situation with the one you owe the debt you so new payment arrangements can be made. All this is done to protect your credit rating and credit score. A new lender will assume that if you haven’t paid the creditors you already have, that you very likely won’t pay them either!

A recent new law allows you to receive one free credit report once yearly from each of the credit bureaus. In addition to keeping your credit record clean in preparation to apply for a business loan, you also need to be watching for identify theft incidents. There are three credit bureaus so you could request a free credit report from a different one of them every four months (for a total of 3 free credit reports per year). This does not include a free credit score – there’s usually a small fee to get that number. You’ll want to do that when you apply for your business loan so you’ll know what the lender/investor will see at that time. Beware of ads promising a free credit score – get all the facts before signing up. Here are the three credit bureaus:

Equifax
800-685-1111
www.equifax.com
P.O. Box 740241
Atlanta, GA 30374-0241

Experian
888-397-3742
www.experian.com
P.O. Box 9532
Allen, TX 75013

TransUnion
800-916-8800
www.transunion.com
P.O. Box 6790
Fullerton, CA 92834-6790

Additional information about avoiding identity theft can be accessed by contacting:

Federal Trade Commission
Consumer Response Center
600 Pennsylvania Avenue NW
Washington, DC 20580
877-IDTHEFT (438-4338)
www.ftc.gov/bcp/edu/microsites/idetheft/

This article is for general information only. For specific issues and assistance, contact a CPA or an attorney for professional advice.