Monthly Archives: February 2016

Top Five Reasons to Establish Business Credit!

Too Many business owners are using their personal credit to
finance the launch, expansion or growth of their business. A
majority of business owners have no idea what business is or
how to establish it. By following a few simple steps any
business owner can establishing business credit, therefore,
separating their personal credit from their business credit.

When business owners use personal credit card to pay for
business expenses, the debt of the business reports back to
their personal credit reports which lowers their scores because
their business debts hurt their personal debt to income ratio.

To help prevent business owners from damaging their personal
credit, every business owner should follow the simple steps of
establishing business credit. By establishing business credit
the debt of the business will report to the business credit
file and not the personal credit file. Establishing business
credit will also help the business build a strong business
credit file so loans, lines of credit wont require the business
owner to sign a personal guarantee.

Here are just a few reasons why every business owner should
establish business credit.

1. Establish creditability. You cant expect to walk into a bank
and ask for a business loan with no business credit or business
history. By establishing a good business credit profile you
will be able to secure the financing your business needs.

2. If your business should fail, you would still be legally
responsible if you used your personal credit to finance your

3. Saving money. Thats right, business credit rates are
typically lower than personal credit rates. A few percentage
points in interest mean thousands of dollars in the long run

4. Float your business through tough times. Even though
everything make be going great currently, you never know when
your company will take a turn for the worse or when economic
times might change. By establishing business credit you will be
prepared for the down time.

5. Get the money you need. Lets face it, without the money you
need to finance the launch or expansion of your business you
really wont be in business at all. Dont make the mistake of
using your personal finances to finance you business.

The are many, many more reasons why you should establish
business credit. We have all heard the saying, “keep business
expenses separate from personal expenses,” right? The only way
to do that is to set up your business properly in the first
place by establishing business credit.

If you are interested in learning…

-What rights does a business owner have if there is incorrect
information on a credit report?

-How do I obtain a business
credit score?

-What do business lenders look at in order to
extend business credit?

-Where do you find companies that grant

-Which companies report to the business credit bureaus?

-What credit cards companies do not require personal

Then I suggest you start the education process of learing how
to establish business credit!

Credit Reports – Get Them For Free Now

There are so many different ways in which you can get credit reports today, but the number of ways in which you might be able to get them for free is limited. Hence, you might want to be familiar with these and know how to not get cheated in the process. You should be familiar with all the different ways in which you might be able to gain from these credit reports so that you can get the reports on time as well as be in a position to implement the information that you gain from the report to try and improve your credit rating.

Getting know cause of deduction

One of the most important things that you might be able to learn from your credit reports is the cause for a decrease in your credit score. Hence, when you know why your credit score is falling down, you might be able to better understand how to stop this from happening and perhaps even fix it if possible. In this way, you should be able to improve your credit score over a period of time. For many people out there, it is important to know about these parameters so that they can be in a better position with their finances.

Use for planning your finances

Another suitable application of the credit reports would probably be in planning your financial future and deciding on what you would be spending your money on. In many cases, people land up in trouble because they spend for unimportant commodities. Don’t end up in such a position and keep your money for the necessary expenses. Remember to read your report thoroughly before you plan out any expense so that you don’t end up losing money in the long run.

To determine mistakes in your credit record

Another extremely useful application of these reports is in determining any mistakes that might be there in your credit score details. In this way, you can try and point out these mistakes before your score is utilized for determining interest rates on your credit cards or any loans that you might be applying for. Hence, this is something that you can think about if you haven’t yet made up your mind regarding whether or not to go in for your report. Since mistakes occur every now and then, it is your duty to identify them and then correct them if necessary with the use of your credit reports.

Hence, it is quite clear that you would want to make use of annual credit report as much as possible in order to get your finances in line and ensure that you don’t end up spending too much of your money. For many cases, it has been established that these reports are required if you want to plan your expenses and have a decent amount in your savings account. There are some reputed websites on the internet that provide you with the option to get these reports for free. Hence, you would want to check it out if you want to plan well for your finances.

No-Credit Car Loans Are For Those Who Don’t Have a Credit History, Often the First Auto Loan

Many first time car buyers are taken by surprise that not having a credit history is a serious detriment to getting their first auto loan. What a surprise! When they start the process, first-time borrowers think they will have a high credit score if they have never defaulted on a loan or missed a payment. Nothing could more fictitious. One is credit score is a measure of a lot of factors combined, including length of credit history and total volume of debt paid off in the past. When you have no significant history of installment loans, not just credit cards, you will see your score is much too low for most car loan lenders. Auto financing with no credit turns out to be a challenge and not the cake walk that was originally intended. Here are some tips that will help you get through this experience with a minimum of hassle.

If you have a minimal credit history, there is a good chance this is your first auto loan. The first loan will probably be the very hardest to get. You will learn that once you pay it off you will find you have a much better chance of getting a good loan in the future. With this in mind, you will want to pay the loan off your first auto loan as fast as possible. It can be a struggle to do this without making the monthly payments too high. A better alternative for your first auto loan is to get a smaller loan that doesn’t require large monthly payments. Once you’ve paid this first auto financing with no credit, you can borrow more the second time around.

It is important to know that your income can go a long way to creating security on debt. If you give the lender proof of income in the form of a paycheck stub or tax receipt this will make a huge difference in no credit auto finance. If you have no income, the fact you have no credit becomes a much bigger problem. This is especially true for students. However, students have a great resource in their parents who they can turn to and get a credit worthy cosigned with little to no problem.

Another tact is the larger your down payment, the smaller your loan amount and the easier it is to get a loan. In fact, some car dealers will extend no credit car loans without much hesitation if the person has a down payment that is large enough. Save at least 30% down if you do not have a car to trade in. If you are trading in a car, you may use this as part of the 30%. The value of your trade in will determine the total loan amount you will need to borrow.

Finally, your credit score will eventually be like a reference in itself. It will show how responsible you were with past debts, providing an indication of how responsible you can be in the future. When you do not have a credit report, you may need to provide a reference that can speak well of you. A landlord is a great option since paying rent is very similar to paying a car loan each month. You can also use your employer as a reference. An employer can verify you have good stability at your job by showing you are a good worker, have received promotions and even that he is willing to be your reference.

This may require a down payment, pay stubs, a reference or even a cosigner. No credit car loans are only a challenge until credit is established. From then on your credit speaks for itself. Visit [] to know more about buying car with no credit history.

Property Loss Mitigation

Lenders are in the business of giving performing loans which are repaid according to agreed terms by the borrowers. This is accomplished by establishing and adhering to a loan approval process which qualifies the property and the borrower against benchmarks and other variables that quantify the likelihood of repayment and the applicable risk premium, loan terms and repayment schedule required to mitigate loan default. However, regardless of the best efforts of the lender and the best intentions of the borrowers some loans on the books will become non-performing requiring steps to change their status. When a loan goes into default depending on the underlying reasons, the options available to correct the problem are varied. The status of a loan being in default inadvertently provides an opportunity to improve, correct or change the financial structure supporting the property or relinquishing ownership interest in the property which can be a viable option under certain conditions to rectify the delinquency. Some of the possible ways to address a non-performing loan and change its status are:-

Loan Modification – changes covenants in a mortgage instrument and accompanying note or trust deed which makes the terms of repayment more affordable to the borrower temporarily or permanently. This can include reduction of interest rate, extension of duration, adding delinquent amount to outstanding principal and reamortize the loan balance, etc. This modification can be all that is required to rectify the mortgage delinquency and allow the borrower to afford the mortgage payments going forward without further default. This allows the lender to keep the loan on the books provide the borrower with some financial relief and make the repayment more affordable based on the property’s cash flow.

Discounted payoff – represents the change implemented by a lender in which it accepts less than the outstanding amount due on a loan to satisfy the indebtedness from the debtor. This allows an owner whose property has correctable diminished performance to acquire third party funding in the form of debt or equity to satisfy the discounted payoff amount and remove the asset from the lender’s balance sheet. This is a positive resolution to the delinquency for all the parities; the lender receives payment of a percentage of the outstanding debt and only has to write off a small amount in contrast to the entire balance, the property owner has established a new loan possibly a bridge or hard money instrument providing time to maturity to correct or improve the property’s fundamentals for stabilization and future refinance, the bridge or hard money lender has added another loan to its books that meet its loan parameters, third party equity provider injects funds into the capital structure to payoff indebtedness to lender while diluting the sponsors’ equity for an attractive Return On Investment (ROI), etc.

Bringing in Outside Equity – an equity partner can sometimes be solicited to recapitalize the capital stack extinguishing the lender’s debt financing or strengthening the property’s fundamentals making it a more attractive candidate for alternative debt financing while maintaining an adequate equity/debt ratio for cash on cash yield purposes. However, this reduces the principals’ equity stake in the property and dilutes their ownership interest. This financial maneuver represents a viable option to address a property being in default and providing corrective measures to the problem while positively improving the position of the stakeholders in the property.

Refinance – a property owner who still has sufficient equity in the asset supported by property value and Loan to Value (LTV) ratio can possibly get a loan from another lender to pay the original lender the total amount due; if other variables in the property profile and borrower profile support the loan. This removes the asset from the original lender’s balance sheet while providing the property owner with a new loan instrument to service going forward. Executing this option makes a clean break from the original lender which may be beneficial especially if the relationship has become tumultuous during the loss mitigation process.

Sale – disposing of the property through sale offers an option of satisfying the delinquency associated with a non-performing loan if the property value and the equity to debt ratio are sufficient to net enough capital after sale to pay off the underlying debt on the property. This could be considered one of the least desired options as it eliminates future ownership interest in the property with its related financial benefits. However, depending on the circumstances surrounding the loan default it may offer a means to make the lender whole, possibly netting the principals cash from the sale in excess of loan satisfaction and associated fees and provide capital to be reinvested into other properties.

Deed in Lieu of Foreclosure – occurs when the mortgagor conveys ownership of the property to the mortgagee to alleviate the lender commencing foreclosure proceedings. The property owner in this circumstance relinquishes all rights in the property which are transferred to the lender via a deed to avoid the necessity of the lender going through the foreclosure process to gain ownership of the subject property. This action represents a more amicable resolution of the non performing loan status without the lender having to resort to litigation to gain title to the property to perfect their security interest. A deed in lieu of foreclosure is considered a friendly foreclosure and it less adversarial in nature than a foreclosure.

Foreclosure – usually represents the last option available to the lender to protect its interest in property and to assert its rights for repayment of indebtedness evidenced by the loan instrument on the realty. This course of action is applied by lenders generally when other options were not executed by the property’s owner, were executed but also went into default or market conditions diminished their relevancy as viable loss mitigation alternatives to address the mortgage status. In foreclosure the lender declares the loan instrument to be in default, notifies the borrower of its responsibility to cure the delinquency, and if not cured pursues litigation to gain ownership of the property for sale to a third party to get repayment of the loan balance from the proceeds of the sale of the property. This is contingent upon the net amount from the sale being enough to satisfy the outstanding loan amount. In the event of the net amount being inadequate to satisfy the outstanding balance this leads to a deficiency judgment against the property owner for a recourse loan. However, the frequency of lenders enforcing deficiency judgments against property owners is debatable in commercial real estate loans enforcement.

Loss Mitigation is used by lenders to work with borrowers experiencing problems with making mortgage payments which could result from a cash flow problem caused by high vacancy factor, tenants’ delinquency, rental rate below market, etc. Lenders are primarily concerned with the repayment of the loan incurred against the property and will try to work with the owners over rough spots during the ownership. The options available are usually specific to the individual property and the underlying reasons for delinquency and the viability of turning its financial picture around. The earlier in the stage of delinquency steps are taken may provide more options of resolution and offer the property owner with the possibility of protecting more equity from erosion.