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Posts Tagged ‘credit’

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Thinking of Selling Your Business? Step 1

February 23rd, 2010 by Matthew C. Keegan | 1 Comment | Filed in Business Services

As the economy begins its slow mend Americans are now examining what steps they can and should take to improve their financial position. The past two years have been difficult for most of us including owners of small and medium sized businesses who have been challenged as never before.

Recession Survival

NACBB Business BrokersBut a challenging environment can also work to your advantage if you are a business owner. Specifically, by staying in business you have clearly demonstrated that your enterprise can survive a deep downturn, unlike some of your competitors who closed up shop or curtailed their operations.

If this is your story then kudos to you! Despite losing business, freezing or cutting salaries, laying off employees and watching corporations get bailed out while you struggled, you have managed to keep your head above water. But what if you’re ready to sell? How can you make that work to your advantage as the economy begins to mend?

Sale Preparation

Under normal circumstances the advice you might receive from a business broker could include telling you to reflect a clear “up trend” before offering your business for sale. But if you were to apply that advice to where the economy is today, then you would have to work at least two more years before your business might show some important gains.

Clearly, 2008 and 2009 were not good years perhaps to the point where your balance sheet was completely off balance. If you were to market your business based on recent data, you might find interest to be low and the offers dismal.

Instead, you may want to focus on the following recommendations offered by NACBB Business Brokers when prepping your business for sale:

Get rid of excess inventory – Likely, you already trimmed your inventory significantly over the past 12-24 months. In any event, determine whether your current inventory reflects your business needs over the next 3-6 months.

Dump debt – When your income drops, tackling debt gets pushed to the back burner. However, if your business has shown an uptick over the past few months, then redirecting some of that revenue to paying down debt makes much more sense than hiring new employees at least right now.

Straighten out receivables – Are your customers paying you on time? Attempt to bring people up to date while considering writing off bad debt for those who cannot pay.

Review your credit – How has your company’s credit held up over the past few years? If your credit has been battered, then it may take some time to fix it. Consider making important tweaks first before putting your business on the market immediately.

Take care of complaints – The Better Business Bureau, state office of the Attorney General, or other consumer advocacy group may feature information about your business. Take care of complaints against your company and ask the respective agencies and organizations to update their information accordingly. This may include a note in your file explaining that the matter has been resolved.

Business Marketing

By taking care of business before you sell your business you can ensure that you attract buyers who won’t be looking for you to discount your price further. You’ve put a lot of work into you business and have demonstrated that it can survive a recession, an important intangible asset worth noting.


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Bad Credit Auto Loans Advice

January 21st, 2010 by Matthew C. Keegan | 4 Comments | Filed in Autos Express, Consumer Tips, Credit Reports

You have seen the ads: if you have bad credit, we can provide a car loan for you! Unfortunately, if you take them up on their offer you could end up paying a very higher interest rate for your loan, costing you a mint in financing charges.

Before you trade in your old gas guzzler, make sure that your credit is in good shape.

Experian, one of the three credit reporting bureaus, says that a person whose credit score is above 700 “usually suggests good credit management.” They also say that most scores fall between 600 and 750 which means that if your score is below 600 then you pose a greater lending risk. (see Experian.com: What is a Good Credit Score?)

But bad credit does not mean you cannot get a new or used car. What it does say is that if you are patient and work first on improving your financial picture, then you can get an affordable loan to cover the cost of your new ride.

Let’s take a look at some steps you might want to take in a bid to improve your credit score:

Pull your credit reports. Did you know that you are entitled to one free copy annually of your credit reports? AnnualCreditReport.com is a site managed by the three credit reporting bureaus—Trans Union, Experian, and Equifax—where you can obtain copies of your reports.

All three reports contain important consumer information about you including your credit accounts, loan balances, payment history, job and personal information, and other details.

Review your credit reports. Examine your credit reports closely to make sure that the information contained in each is accurate and up to date. Wrong or outdated information can pull down your credit score, perhaps enough to affect what lenders will charge you for your car loan.

Nolo advises consumers to “complete the form the credit bureau provided to dispute entries in your report. List each incorrect or out-of-date item and explain exactly what is wrong.” After thirty days, that information must be removed from your credit reports if in error. (see Nolo.com: How to Clean Up Your Credit Report)

Obtain your credit score. Through AnnualCreditReport.com, you can obtain your credit score too. Unlike your credit report, you will need to pay a fee for this service.

Trans Union and Equifax offer credit scores through this service (Experian requires you to obtain it through their website), so choose just one company and pay that fee. This information will serve as a baseline score going forward, a number you will want to improve as you fix your credit.

Analyze your debt. In addition to reviewing your credit reports for mistakes or outdated information, these reports can give you a good indication of what is holding down your credit score.

You cannot do anything about negative, but correct bad credit information such as defaulting on a loan or filing for bankruptcy. Those events will show up on your credit reports for at least seven years. But if you have made late payments to your creditors, landlord, or utility companies then work toward making your payments on time while also paying more than the minimum balance on your credit cards each month.

Give it time. Certainly, if you want or need a new car right now there is not much to stop you from applying for a loan. But consider this: if you are considered to be a sub-prime borrower, then you could pay two or three times the going rate for your car loan. Better for you if you were to delay your purchase until your score improves.

Work actively to pay down your debt, resist taking out new credit, pay your bills on time and within six to twelve months you can pull your credit reports and obtain your credit score again. By then, your score may have improved enough to where you can get a car loan at a favorable rate.

Considerations

  • When it comes time to get a car loan, shop around. Credit unions generally offer a lower rate than commercial banks.
  • Put more money down. If you have bad credit, then make a larger down payment. If you assume a greater portion of the risk, then lenders may adjust their terms accordingly.
  • The look, feel, and smell of a new car is enticing. However, your car can lose as much as one-third of its value within the first year of ownership. You may do better finding a late model used car whose price reflects its depreciation.

Adv. – If you’re planning to buy a new car, then you’ll want to get price quotes or find a dealer to arrange for a test drive. You may also want to arrange for your own auto financing which can save you hundreds of dollars on your next car loan.


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How to Negotiate With Your Creditors

January 19th, 2010 by Matthew C. Keegan | 3 Comments | Filed in Consumer Financing, Consumer Tips

If you have significant debt and are finding it difficult to reduce your financial burden, then negotiating with your creditors can help you manage your finances better. An important aspect in any plan involving financial management is working to lower your interest rates or even possibly having some of your debt forgiven.

Assemble your credit statements. Financial documents such as your credit card and loan statements can be useful in helping you determine what you owe and how much interest you are being charged for each debt. Review your statements and come up with a plan to have your high interest rate credit cards reduced. (see The Wall Street Journal: Credit Woes Hit Home)

credit cardsFor example, if you are paying 21.9 percent for one credit card, you can save money monthly simply by having that rate reduced to a more manageable 12 percent. That lower interest rate means that less money is being paid out monthly to cover interest charges while a larger portion of your payment can be used toward the loan principle. You may be able to reduce the amount you pay on your debt every month while helping yourself get out of debt faster.

Contact your creditors. Each of your statements includes contact information outlining how to reach your creditors. Contact your creditors and ask that your interest rate be reduced. According to Brad Dakake, a consumer advocate with Massachusetts Public Interest Research Group, “There’s no incentive for them to lower your rate unless you call. The squeaky wheel gets the oil.”

Will you get the lower rate? That’s hard to say. But, you won’t get a lower rate unless you ask. You may be paying a higher rate because you were late making payments or you deemed as a higher credit risk. No matter, credit card companies will sometimes reduce your interest rate just because you asked.

What about loan forgiveness? Now for the tricky part: can you get your loan balance reduced or forgiven? If so, what will that mean when it comes to your personal credit?

A lender may write off your loan if you have no way of making payments. But that comes with a price: your credit will take a major hit which means that you’ll have this mark on your credit for many years to come. While you did not declare personal bankruptcy, some lenders will view this action similarly.

Your credit score will be reduced and you may find it difficult to obtain new financing, rent an apartment, buy a home, even get a job. Yes, even employers can check up on your credit to see if you are a responsible with your debt.

Planning Ahead

Finally, if you are deeply in debt, what got you there? Poor spending habits? Job loss or reduced income? Mortgage problems? Seeking the assistance of a qualified financial adviser such as a debt consolidation specialist can help you resolve these issues and put you back on the path to financial freedom. (see SmartMoney.com: 4 Ways to Help Shrink Your Debt)

Just make sure that the person you find has the skill sets you need (degree, licensing, references) and presents a plan that will repair your credit not destroy it.


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Self Employed? Home Loans For You!

November 2nd, 2009 by Matthew C. Keegan | 1 Comment | Filed in Home Financing

For the self employed, you know one important way to hold down your tax obligations is to find as many deductibles as possible. After all, you work hard — why allow Uncle Sam to take more money from you then “he” should? One way to limit your pay out is to buy a home.

Loan Documentation

fall leavesUnfortunately, one of the more difficult things for you to do is to document your income, something that most lenders required in today’s economic environment. A few years back, lenders would have issued no-documentation mortgages, but those practices died with the mortgage collapse of 2008.

Home loan brokers will want you to substantiate your income in a number of different ways. If you pay yourself, then you can show your last two or three pay stubs as well as W2 forms for the past two years. However, that may not be possible for some self employed people particularly if you take money out of your business as a disbursement, not salary.

Financial Information

If that’s your situation, then you understand that you’ll need to work with a mortgage broker who understands the unique needs of the self employed. Some lenders are fine with less documentation, however they are likely to want you to provide some financial details about yourself including the following:

  • Your checking and savings account statements for at least the last three months.
  • Copies of your federal and state income tax returns for the past two or three years.
  • A copy of your business’s articles of incorporation in addition to business checking account statements.

Don’t worry about being rejected, especially if you have very good credit. Lenders are in the business of lending people money and they can only make money off of you if you borrow from them. Consequently, every loan applicant is treated as a possible client and lenders will bend over backwards to try to find a way for you.

Credit Reports

Keep in mind that your mortgage lender will obtain all three copies of your credit reports and credit scores from Experian, Equifax and Trans Union to help them make their determination. You may be asked to come up with a larger down payment, particularly if your income fluctuates. That doesn’t mean you won’t be approved for a home loan, rather that the lender wants you to assume a greater portion of the risk.

Finally, if you are not getting the satisfaction you expect, try a different mortgage broker. Some brokers are very tight with their lending requirements while others are cautious, but still willing to take a risk on you if you have a track record of very good credit.

Adv. – Mortgage interest rates remain near historic lows.  Whether buying new and refinancing your current home, you’ll want to take advantage of low rates before inflation kicks in. Please stop by PickMyMortgage.com or SayLending.com to find the best home financing options available.


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