Friday, August 25, 2006

The Credit Fiasco

The first thing I want to address is credit, and this is 100% a result of something I just dealt with myself. IF YOU DO NOT GET YOUR CREDIT REPORT YEARLY AND CHECK IT OUT YOU ARE GOING TO RUN INTO PROBLEMS!! It’s nearly a certainty. Creditors are quite simply carefree when reporting to the bureaus. For anyone who doesn’t know, there are three credit bureaus, Equifax, TransUnion, and Experian. Basically any lender will report your payment status and history to one or more of the bureaus. That’s typical, and fair enough. But there isn’t much rhyme or reason to their reporting, sometimes they do, sometimes they don’t. And at some point a mistake may be made in posting payments or balances to your account, dates, addresses, there are a number of things they can screw up. But the kicker is that you don’t find out until you are about to close a refinance at the bank on a couple of 6 figure loans, unless you monitor your own credit. Do I sound upset? I should be, it happened to me just like that, and I should know better. I have studied credit, how to score it, improve, dispute, when to check it, how to use it, everything…….but I got careless, and didn’t get my yearly report. And it almost cost me. What’s +2% yearly on 300K? Yeah. To make a long story short, basically my bank had applied a couple of payments to a different account of mine so I showed up as delinquent for each one on my credit report, which I hadn’t checked until PAT AND I WERE SITTING AT THE BANK READY TO CLOSE AND THEY PULLED MY CREDIT.

Now, we are by no means made of money, so when the bank sees your credit score has dropped recently due to some derogatories, they are going to rethink their lending position. And rightfully so!! They changed their tune by almost 2% APR. I had to go back and contact the creditors who had made the mistake, explain to them how to correct the problem (I know how because we report clients to the bureaus), then go and dispute each one on ALL THREE REPORTS. This all took some time. And I had to wait 30 days for the corrections to show up on my credit reports before I could close my original refinance. An enormous hassle.

I had known for 6 months I would be refinancing these notes. Had I done what I knew I should be doing, I would have been pulling my credit reports and reviewing them. My problems would have been averted before I ever encountered them. If you haven’t checked your credit, go to www.annualcreditreport.com and you can pull one free copy from each bureau per 12 months. It is not very user friendly, but you can probably manage. If you have problems contact me. If you have pulled your credit, but expect a major transaction in the future, it is worth your $15 to check it again 4-6 months ahead of time, trust me. And everywhere you turn you will find someone wanting to monitor or ‘fix’ your credit. Beware. They cannot ‘fix’ or monitor your credit anymore than you can, and often they will do neither one for quite a fee.

Your credit is a serious deal, and it will control the future of your business. If you come from a situation like I do, your credit is the only way you can go from ‘poor’ to being able to borrow some serious money. You must monitor and take care of your credit. Get your credit report, and do it regularly. If you don’t know what you are looking at, drop me a line and I’ll help you out. But don’t screw up your business future by being ignorant.

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