1. Data Repositories & data collection
2. What is a good credit score?
3. Different kinds of personal credit reports
4. Difference in credit scores
5. Will credit scores drop when they run credit?
6. Calculation of Credit Scores
7. For those who have no credit history
8. Credit Problems and how to improve your personal credit scores
9. How to handle delinquencies?
10. Correcting derogatory information on the credit report
11. Corporate credit cards, co-signatures, divorce – how do these things affect credit?
12. What does the average personal credit report look like?

We all know that the availability of capital is one of the most significant determinants of success for any business.  Getting the right amount of business financing can make the difference between success and failure for a business owner / partner.  Since the ability to access capital and financing is critical to the formation, operations and growth of any successful business enterprise it is critical to get a good understanding of the one element above others that has the greatest impact on the ability of a business and individual to obtain capital – we are of course talking about credit.

For a business owner / partner there are two kinds of credit that they have to be aware of:

Personal Credit Scores:  This is a compilation of credit scores reported by the three major repositories of credit data in the United States – Experian, Trans-union and Equifax.

Business Credit Scores:  Unknown to many businesses this is an invaluable resource that is also used by the lending industry to gauge the credit worthiness of a business enterprise – business credit scores are typically obtained from Dun & Bradstreet  (D&B.)

Both personal credit scores and business credit scores are vastly different and it is important to understand each type of credit score and it’s implications for the borrowers and the lender and thus we have devoted separate sections for the discussions of each type of credit

It is often said in the world of lending that having good credit is often much better than having some of the cash you need and truer words were never said.  Even in challenging economic times, a business owner / partner with good personal credit will be able to secure financing and manage their cash flows relatively easily compared to others who may have some cash but do not have good personal credit scores.  A credit score ranks applicants according to the likelihood that they will default in the future – some one with a high credit score represents a loan that is less likely to default versus a borrower with low credit scores which is seen as being indicative of a greater default risk

1. Data Repositories & data collection

-  Revolving loans:  these are credit facilities where in a set credit limit is established by the lender and the borrower can borrow up to the limit, pay it down and borrow from it again.  Credit cards and charge cards are revolving credit facilities.  There are however some credit cards like the American Express that requires the payment of the entire amount outstanding at the end of the month – this kind of credit card would not be classified as an revolving loan (although even American Express has separate accounts like sign and travel and other flexible payment credit cards allow the payments over time and these are classified as revolving lines of credit.)

-  Installment loans:  these are credit facilities where the lender extends out a total loan for a set time period and the borrower pays back a fixed monthly payment every month and cannot draw down again.  Car leases and personal loans are examples of installment loans.  Auto loans while classified as installment loans may be reported under a separate heading of Automobile credit.

-  Mortgage loans:  as the name suggests these are classic mortgage loans that lenders give to homeowners when they purchase or refinance a mortgage.
 
-  Home Equity loans:  HELOC’s as they are generally known are reported separately from mortgages since in a HELOC the borrower has the ability to tap into the line of credit at a later date whereas in a traditional mortgage they do not.

Also collected by the data repositories are the payment histories on each of the credit accounts – lenders report typically at the end of a month, the balances due on each credit account, the timeliness of payment, the balance available on the line.  Thus the repositories have all the information about the line of credit between the lender and the borrower and they use all the information they have to come up with a credit score.