Safeguarding Your Credit

What does your personal credit score mean?

Personal credit is one of the most, if not the most, important parts of obtaining a lease or loan on equipment. Most lenders use the personal credit scores (Fair Isaac, Beacon, or Empirica) from at least one of the three major credit bureaus to qualify financing. In many cases, it is considered the most crucial component in obtaining an approval. Several parameters in your credit file, including length of credit history, number of open accounts, loans, mortgages, public records, and other criteria are formulated to produce a three-digit score between 300 and 950. Usually, a lender will use a combination of this credit score with other factors when determining your risk. Healthy credit can save money by lowering the interest rates applied. Important factors to consider when managing credit include the length of time required to establish positive credit, payment punctuality, expense moderation and attention to accurate activity.

Keeping an eye on your credit

False charges, inactive accounts, and delinquent balances can lead higher rates and even worse a declined application. It is important for businesses and business owners to check their credit reports regularly. Make sure the information in your credit report is correct. If not, dispute it with the credit agencies and/or with the creditor directly. Consumers are advised to check their credit report by accessing www.annualcreditreport.com. This inquiry is free of charge (once a year) and will not lower your score.

Important Credit Tips

We have also outlined some other tips that can help strengthen your chances for approval:

* Check your credit score before applying for an equipment lease – Advising your lease company of your overall strengths and weaknesses is always a wise move. If you have any derogatory accounts such as liens or judgments, you can work immediately on clearing those up.

* Pay your bills on time – It sounds simple, but this is the most important thing you can do to keep your score high. Delinquent payments and collections have a major negative impact on a score.

* Pay down revolving debt / credit cards before applying for a lease – Most lenders want to see some revolving availability, especially on credit cards accounts. 50% available credit should be your minimum target.

* Limit your credit inquiries – Be careful how many applications you fill out for credit as too many inquiries may affect your credit score.

* Keep leasing inquiries to a minimum – Many equipment lenders become cautious of financing when they see too many leasing inquiries in a certain period of time. Although many business owners shop multiple brokers for the best rate, we suggest picking a maximum of two reliable brokers to offer quotes.

* Pay your lease on time: Although most equipment leases are not reported on your personal credit report, they are reported on your business credit. Leases and pay history can be obtained by lenders through a variety of public information such as Payment, Dun and Bradstreet, and Credit.Net. The more timely your lease payments are the better off you will secure funding in the future.

If you have any inquires or for a free consultation on your credit please call our credit office at (877) 474-4402.

JM Funding Group Management