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Credit Crisis: Blip or Full-Blown Recession?

In 2008, having entered its second year, there seems to be little chance of the credit crisis easing forcing most financial analysts to re-evaluate their position and work out how severe it will get and how much longer it will prevail. Indeed, a recent UK survey has highlighted that customer confidence is at its lowest level since the strike-ridden days of 1974 as the media continues to report abundant stories of financial doom and gloom.

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How To Obtain Equipment Financing Or Leasing If You Have Business Or Personal Credit Challenges

A Fair Isaac credit score below 600 for the principal owner(s) of a business makes it extremely difficult to borrow money to acquire equipment for your company or business. The reason being that the equipment provides the only real “collateral” for the loan/lease in addition to the personal guarantee of the owner(s). Most lenders are not in the equipment re-marketing business, so how the principals handle their personal credit gives them the biggest indicator as to how individuals will handle other borrowings.
The first step in this process then is to review all three credit bureaus Experian, Trans Union and Equifax. Consumers are entitled to one free credit report per year from each agency. Not only to review the score, but determine if there are any items that should not be on the report. If the score is low or marginal because of errors, that’s one thing. This can be corrected over a period of a few months and should improve the overall score as well.
If the score is low because of late payments, excessive inquiries, too much revolving debt or general lack of paid as agreed accounts then you could then try to apply for equipment financing or leasing in a different way. We will talk about this to follow.
At the same time, checking the company credit rating is an important step in this process as well. It pretty much all starts with D&B. they have something called a “D & B Paydex Score”. This is a numerical ranking from 0-100 that reflects how you handle trade debt payments compared to other companies in the same industry. A score of 60 and above can be acceptable to lenders but really 70+ is the criteria that most are looking for when evaluating credit. Once again the same approach applies as with the personal credit bureaus. If your score is low because of no or lack of D&B information or errors on the existing report these are correctable. You will have to pay D&B to have your company assigned a Dun’s number if no information exists. If erroneous information appears is can be removed over a period of time, which should also improve the Paydex score. If existing scores are low because of trade accounts not being paid in a timely manner AND you have a low credit bureau score for the same reasons-stop here. You will have an extreme difficult time obtaining debt financing for equipment.
If however you personal scores are low but business credit is good and you are an “S” or “C” corporation structure you still have one option. It’s what is called “Corporation Only” financing. To be considered for this requires the following:
1. A business history of five years +.
2. D & B Paydex score of 70 +.
3. An average business, bank account balance for the last three months of $25,000 +.
4. Comparable paid as agreed debt rating, for the dollar amount requested.

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Pros and Cons of Accepting Reward Cards

Of all the credit cards issued in the United States today, as many as 60% are reward cards or at least contain some reward component. The fact that cardholders are now positioned to gain much more from their credit cards, has made the market increasingly competitive.

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