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Thread: Credit Report Repair/Business Loans

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    Default Credit Report Repair/Business Loans

    I know there's been many threads about credit report repair, but I wanted to start a new one. I'd like to clean up my report as much as possible since I'll be looking for a business loan in the next year or two. As for the negative things on my account- they are accurate and most are two to three years old with nothing negative since then. Is it best to dispute them first or to write goodwill letters to each company?

    Is this solid advice or terrible advice? http://www.googobits.com/articles/23...tive-item.html


    Also... Capital One was one of my worst offenses. They harass me with two to four mailings per week to get a card with them again saying that I am on the right track now and blah blah blah... because of this, will it be easier to get them to remove negative information and how do I go about doing that?

    As for business loans... my credit score is around 650 (terrible I know)... is it even possible to get a loan on my own or with a business partner who has a score over 700? I'm not really sure how it works.

    Any help would be greatly appreciated! I'm lost when it comes to fixing my credit and everything I find seems contradictory!

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    Default Re: Credit Report Repair/Business Loans

    when it comes to future small business loans, things appear to be getting worse instead of better ...




    (snip)"The regulatory environment makes it very difficult to do what we do," says Mr. Depping, who last summer saw his bank hit with an enforcement order from the Federal Deposit Insurance Corp.

    A spokesman for the FDIC declined to comment on Main Street, a unit of closely held MS Financial Inc. Dan Frasier, director of corporate activities for the Texas Department of Banking, confirmed that Main Street is "working on the process of moving out of the state banking system," but declined to provide details.

    Bankers have long complained about their overseers, but it is rare for a bank to basically close its doors aside from an acquisition or failure. Mr. Depping blames the move on a tightening regulatory noose.

    Regulators came under fire in the financial crisis for lax oversight that allowed financial institutions to dole out too much credit to unworthy borrowers. Some bank executives now complain that federal and state agencies have swung to the other extreme, poring over minute details of virtually every loan, including those to small businesses.

    "The No. 1 complaint that we hear from community bankers is that they feel that regulators have gone one step too far and are choking off lending," says Paul Merski, chief economist at the Independent Community Bankers of America, a trade group that represents small banks.

    Regulators defend their efforts, saying that intensive oversight is needed to prevent banks from taking too much risk and repeating the behavior that got the industry in trouble.

    Mr. Depping has been on a collision course with regulators since 2009, when FDIC examiners began questioning the bank's large concentration of small-business loans. Nearly all of Main Street's $175 million loan portfolio has gone to customers like dentists, owners of fast-food franchises and delivery-truck drivers, who use the loans to purchase equipment. The bank's average loan size is $100,000 to customers who have less than $1 million in annual revenue, Mr. Depping says.

    Mr. Depping says that Main Street's focus on small-business lending has sheltered the bank from much of the devastation that has swept the industry, including 385 bank failures since the start of 2008.

    Main Street had profits of $1 million in the second quarter and wrote off 1.25% of its loans as uncollectible. That is below the industry's charge-off rate of 1.82% in the FDIC's data for the first quarter, the latest available. The bank has earned nearly $11 million in the past year.

    In July 2010, the FDIC slapped Main Street with a 25-page order to boost its capital, strengthen its controls and bring in a new top executive. Regulators also said the bank was putting too many eggs in one basket. Mr. Depping says regulators wanted the bank to shrink its small-business lending to about 25% of the total loan portfolio, down from about 90%.

    Mr. Depping says he explained to regulators that Main Street has focused on small-business lending since he bought the bank in 2004 with a group of investors. He says the bank makes credit decisions based on a combination of the borrower's personal-credit and business-credit histories, among other factors.

    "We felt that servicing small business is something the country needs and that we're really good at it. I thought the model was working just fine," Mr. Depping says.

    Main Street also was required to increase its capital cushion and prohibited from substantially expanding its balance sheet.

    FDIC officials told the bank to file financial reports that "accurately reflect the financial condition of the Bank as of the reporting date," particularly regarding the money it set aside to cover loan losses.

    The FDIC also ordered Main Street to shore up its lending guidelines so that loans are "supported by current credit information and collateral documentation, including lien searches and the perfection of security interests; have a defined and stated purpose; and have a predetermined and realistic repayment source and schedule," according to the order.(snip)


    Reading between the lines, it would appear that the FDIC's new requirements limit the acceptable percentage of small business loans versus personal loans, auto loans, mortgages and other types of loans, for reasons of 'risk diversification'. Unfortunately, as fewer and fewer Americans can qualify for new mortgages, new auto loans, new personal loans etc. this trickles down and pressures a reduction in the amount of new small business loans that a bank may approve.

    Also reading between the lines, it would appear that the FDIC's new requirements for small business loans will involve both a 'perfected security interest' i.e. substantial borrower collateral with which the bank can secure its exposure in writing new small business loans, and a 'predetermined and realistic repayment source' i.e. an already working and proven business model.

    Stated another way, future business loan applicants who lack significant collateral ( i.e. equity / investments ) that can be pledged against the small business loan, and who are seeking to start up a new business that is NOT a franchise with a proven business model, will have much more to worry about than obtaining a 780+ credit rating !!!

    ~
    Last edited by Melonie; 08-10-2011 at 02:43 PM.

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    Default Re: Credit Report Repair/Business Loans

    Quote Originally Posted by _Elle_ View Post
    I know there's been many threads about credit report repair, but I wanted to start a new one. I'd like to clean up my report as much as possible since I'll be looking for a business loan in the next year or two. As for the negative things on my account- they are accurate and most are two to three years old with nothing negative since then. Is it best to dispute them first or to write goodwill letters to each company?

    Is this solid advice or terrible advice? http://www.googobits.com/articles/23...tive-item.html
    Negative things on a credit report can mean alot of things. Have you seen your report recently? Are these items unpaid collections? Unpaid collections are a waste of time to dispute. Paid collections I always had my clients dispute as a loan officer. It takes time and money for a creditor to prove to the credit reporting agencies the item is valid. If the item is paid the creditor wont bother. Late payments? Dispute them. The link has some valid points. I have always done disputes online or over the phone with no problems. This idea that it all has to be done in writing is only important if there is the possibility of legal action. The whole process actually takes 60 to 90 days, not 30 as the article states. You can go to Transunions website and find a phone number to file the dispute otherwise.

    Quote Originally Posted by _Elle_ View Post
    Also... Capital One was one of my worst offenses. They harass me with two to four mailings per week to get a card with them again saying that I am on the right track now and blah blah blah... because of this, will it be easier to get them to remove negative information and how do I go about doing that?

    As for business loans... my credit score is around 650 (terrible I know)... is it even possible to get a loan on my own or with a business partner who has a score over 700? I'm not really sure how it works.

    Any help would be greatly appreciated! I'm lost when it comes to fixing my credit and everything I find seems contradictory!
    Never go to a creditor directly to have them remove negative information from a credit report. You will just get a run around. Start with the credit reporting agencies and work your way back.

    Credit card offers you get in the mail do not reflect anything other then the equivalent of spam. Companies ask the credit reporting agencies for lists of people who meet certain criteria ie credit score above 630 etc. They get the addresses only and send you offers. Until you apply they cant tell you details because they haven't pulled your report. Capitol One and Chase are the worst to get cards from.

    What kind of business loan are you looking for? What dollar amount? Keep in mind, in a couple of years alot of policies can change. Getting the best credit score you can in the mean time is your best bet.

    If you have detailed questions please feel free to pm me.
    Nature knows no indecencies; man invents them. ~ Mark Twain


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    Default Re: Credit Report Repair/Business Loans

    Quote Originally Posted by Melonie View Post
    when it comes to future small business loans, things appear to be getting worse instead of better ...


    http://online.wsj.com/article/SB1000...951766826.html

    (snip)"The regulatory environment makes it very difficult to do what we do," says Mr. Depping, who last summer saw his bank hit with an enforcement order from the Federal Deposit Insurance Corp.

    A spokesman for the FDIC declined to comment on Main Street, a unit of closely held MS Financial Inc. Dan Frasier, director of corporate activities for the Texas Department of Banking, confirmed that Main Street is "working on the process of moving out of the state banking system," but declined to provide details.

    Bankers have long complained about their overseers, but it is rare for a bank to basically close its doors aside from an acquisition or failure. Mr. Depping blames the move on a tightening regulatory noose.

    Regulators came under fire in the financial crisis for lax oversight that allowed financial institutions to dole out too much credit to unworthy borrowers. Some bank executives now complain that federal and state agencies have swung to the other extreme, poring over minute details of virtually every loan, including those to small businesses.

    "The No. 1 complaint that we hear from community bankers is that they feel that regulators have gone one step too far and are choking off lending," says Paul Merski, chief economist at the Independent Community Bankers of America, a trade group that represents small banks.

    Regulators defend their efforts, saying that intensive oversight is needed to prevent banks from taking too much risk and repeating the behavior that got the industry in trouble.

    Mr. Depping has been on a collision course with regulators since 2009, when FDIC examiners began questioning the bank's large concentration of small-business loans. Nearly all of Main Street's $175 million loan portfolio has gone to customers like dentists, owners of fast-food franchises and delivery-truck drivers, who use the loans to purchase equipment. The bank's average loan size is $100,000 to customers who have less than $1 million in annual revenue, Mr. Depping says.

    Mr. Depping says that Main Street's focus on small-business lending has sheltered the bank from much of the devastation that has swept the industry, including 385 bank failures since the start of 2008.

    Main Street had profits of $1 million in the second quarter and wrote off 1.25% of its loans as uncollectible. That is below the industry's charge-off rate of 1.82% in the FDIC's data for the first quarter, the latest available. The bank has earned nearly $11 million in the past year.

    In July 2010, the FDIC slapped Main Street with a 25-page order to boost its capital, strengthen its controls and bring in a new top executive. Regulators also said the bank was putting too many eggs in one basket. Mr. Depping says regulators wanted the bank to shrink its small-business lending to about 25% of the total loan portfolio, down from about 90%.

    Mr. Depping says he explained to regulators that Main Street has focused on small-business lending since he bought the bank in 2004 with a group of investors. He says the bank makes credit decisions based on a combination of the borrower's personal-credit and business-credit histories, among other factors.

    "We felt that servicing small business is something the country needs and that we're really good at it. I thought the model was working just fine," Mr. Depping says.

    Main Street also was required to increase its capital cushion and prohibited from substantially expanding its balance sheet.

    FDIC officials told the bank to file financial reports that "accurately reflect the financial condition of the Bank as of the reporting date," particularly regarding the money it set aside to cover loan losses.

    The FDIC also ordered Main Street to shore up its lending guidelines so that loans are "supported by current credit information and collateral documentation, including lien searches and the perfection of security interests; have a defined and stated purpose; and have a predetermined and realistic repayment source and schedule," according to the order.(snip)


    Reading between the lines, it would appear that the FDIC's new requirements limit the acceptable percentage of small business loans versus personal loans, auto loans, mortgages and other types of loans, for reasons of 'risk diversification'. Unfortunately, as fewer and fewer Americans can qualify for new mortgages, new auto loans, new personal loans etc. this trickles down and pressures a reduction in the amount of new small business loans that a bank may approve.

    Also reading between the lines, it would appear that the FDIC's new requirements for small business loans will involve both a 'perfected security interest' i.e. substantial borrower collateral with which the bank can secure its exposure in writing new small business loans, and a 'predetermined and realistic repayment source' i.e. an already working and proven business model.

    Stated another way, future business loan applicants who lack significant collateral ( i.e. equity / investments ) that can be pledged against the small business loan, and who are seeking to start up a new business that is NOT a franchise with a proven business model, will have much more to worry about than obtaining a 780+ credit rating !!!

    ~
    This has little to do with what the person is asking about. I would imagine the loan Elle is thinking of is alot smaller and could be done on the personal side.

    Second of all the reason this regulation was made is because community banks are drowning in small business loan defaults without collateral.
    Nature knows no indecencies; man invents them. ~ Mark Twain


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    Default Re: Credit Report Repair/Business Loans

    Vamp - I pulled my reports within the last week and everything on mine is late payments in various ranges from roughly about two years ago with nothing negative since then. The only settlement was with Capital One, and everything else was paid in full. No unpaid collections at all. I started putting in disputes online (without explanations) with TransUnion and Equifax so far and I'm hoping that because they are paid like you said that the creditors won't fight them coming off of my reports.

    I know Capital One is absolutely awful, but I was just curious why you state them and Chase as the absolute worst to get cards from. I have a Discover card and a bank credit card that have zero balances, and that's it. I closed my old accounts, which looking back on it was also a mistake.

    For a business loan, we were considering something in the 10k range more or less. We started with a decent amount of capital and were looking towards building upon that through online and club sales before we considered a retail location. An opportunity for an excellent location for us has come up, though... so we are considering whether it will be possible to swing it and get the business loan to make sure everything is covered location wise. Our business accounts are through a local credit union, but we have not yet looked into how difficult it is to get a small business loan with them as of yet.

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    Default Re: Credit Report Repair/Business Loans

    Thank you for the help so far, btw!

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    Default Re: Credit Report Repair/Business Loans

    Quote Originally Posted by _Elle_ View Post
    For a business loan, we were considering something in the 10k range more or less.
    For the most part, business lending is not going on. For loans that small, it never was. But now, really difficult. If you are even going to think about a business loan, you'll need:
    1. A very detailed business plan with resumes of your principal officers,
    2. Your and your partners last three years worth of tax returns, and
    3. Cash flow projections for five or more years out.

    Believe me, it's easier to $1 million than it is $10,000.

    HTH
    Z

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    Default Re: Credit Report Repair/Business Loans

    I have the first two and can work on the second. Would it be easier to get a personal loan from my credit union?

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    Default Re: Credit Report Repair/Business Loans

    yes, obtaining a personal loan isn't constrained by the same 'regulatory loan type percentage limit' since it falls into a different category. A personal loan also won't subject your business model to an evaluation process. However, the interest rate is likely to be higher.

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    Default Re: Credit Report Repair/Business Loans

    Quote Originally Posted by _Elle_ View Post
    Vamp - I pulled my reports within the last week and everything on mine is late payments in various ranges from roughly about two years ago with nothing negative since then. The only settlement was with Capital One, and everything else was paid in full. No unpaid collections at all. I started putting in disputes online (without explanations) with TransUnion and Equifax so far and I'm hoping that because they are paid like you said that the creditors won't fight them coming off of my reports.
    Settlements are tricky. How long ago was the settlement? Was the settlement done in a way that it was considered paid in full and taken off the credit report? If you didnt discuss these at the time then no it was not. The settlement is going to make things difficult for you until it drops off the report. Disputing old late payments has always worked for me. They will be taken off with the dispute unless they are connected to the settlement.

    Quote Originally Posted by _Elle_ View Post
    I know Capital One is absolutely awful, but I was just curious why you state them and Chase as the absolute worst to get cards from. I have a Discover card and a bank credit card that have zero balances, and that's it. I closed my old accounts, which looking back on it was also a mistake.

    For a business loan, we were considering something in the 10k range more or less. We started with a decent amount of capital and were looking towards building upon that through online and club sales before we considered a retail location. An opportunity for an excellent location for us has come up, though... so we are considering whether it will be possible to swing it and get the business loan to make sure everything is covered location wise. Our business accounts are through a local credit union, but we have not yet looked into how difficult it is to get a small business loan with them as of yet.
    Chase and Capitol One are known for their tricks and games to cause people to go deeper in debt and higher interest rates. The easiest thing for you to do is take these two years to clean up your credit. It shouldnt be too hard really. I tell clients keep only three credit cards. The two oldest credit card accounts you have and the one you are currently using. Anything more then this can cause probs with the loan process.

    If you go to myfico.com it will give you information about what goes into your fico score. The fico score is a more complex version of the credit score. Fico is what most loan decisions are based on.

    For a 10k loan it would be easier to get a personal loan. Every bank is different in what they require for business and personal loans. So ask alot of questions. Not all banks require business plans but instead require that you are in business for two years with tax returns.

    I would also use this time to shop around for credit unions and banks to see who has the best set up and best service. Policy can change in two years but the way a bank is run doesnt. Is the staff knowledgeable? Can they explain things well? Are they pushy?

    People are always so obsessed about the rate they forget about terms. You can get an awesome rate on a loan but get shitty terms that make it just as bad as a high interest rate. Compare the terms fees? late payments? line of credit or installment? variable rate or fixed? etc. Do alot of home work and compare compare compare.

    Start with the credit union you are at. They will want to keep your business and may bend more. Credit unions generally do not have as many tricks embedded in their loan products.
    Some credit unions out source their products. Meaning, for example, they sign you up for the credit card but they dont own it or determine the rate and terms; another financial institution does. If this is the case generally there are more tricks involved.
    By tricks I mean default rates, a million different fees, etc.

    Purchasing a brick and mortar location is a much easier process because their is collateral involved. So when you compare make sure to mention all these details as well.
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    Default Re: Credit Report Repair/Business Loans

    The settlement was not discussed at all. I just paid what they asked me to about a year and a half ago and that was the end of it. It's still on my credit report. In order to get that removed, would I actually have to write Capital One some sort of letter?

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    Default Re: Credit Report Repair/Business Loans

    Quote Originally Posted by _Elle_ View Post
    I have the first two and can work on the second. Would it be easier to get a personal loan from my credit union?
    Your credit union will be much more likely to give you a personal loan than a business loan!

    Personally, I think cash flow projections five years out are a nuisance, but You should have cash flow projections for three years even if you are not going for a business loan. You should also know what the payback period is. Shorter is better. I also do three sets of cash flow predictions: best, intermediate and worst case. If lending is possible, otherwise equity, then borrow on the best case. Draw funds initially on the worst case. Be flexible. My first startup got a device ready to go to manufacturing and sales came through with an order for twice our best case scenario! The reverse can happen too.

    One last thing, have your elevator pitch down cold.

    HTH
    Z

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    Default Re: Credit Report Repair/Business Loans

    Quote Originally Posted by _Elle_ View Post
    The settlement was not discussed at all. I just paid what they asked me to about a year and a half ago and that was the end of it. It's still on my credit report. In order to get that removed, would I actually have to write Capital One some sort of letter?

    Because it wasnt discussed at the time of the settlement it will be very hard to get it removed. You can always try. When it comes to these kinds of things it never hurts to try. The worse they can do is say no.

    The settlement will cause issues for you though. When applying for loans banks take a very negative view of settlements. I have seen small basic loans get turned down because a small settlement. But if you have a good relationship with the credit union and they are desperate for loan growth they may over look it. I have seen that happen too.

    Most business loans now require a personal guarntee in addition to the business. I would ask about this comparing the personal loans to the business for the best deal and possiblity of approval.

    Good Luck! And as always if you or anyone else has questions please feel free to pm me.
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