Low personal credit scores make it very difficult for most Americans to take advantage of low mortgage interest rates and to qualify for any financing to start a business.

In fact, figures provided by FICO ® show that 25.5% of consumers — nearly 43.4 million people — now have a credit score of 599 or below, marking them as poor risks for lenders.

This is due to several important reasons:

1. The banks are taking over 2 TRILLION dollars out of the consumer credit markets last year and this year. That means they are cutting off your personal credit card limits (just like they did two years ago on HELOCs (Home Equity Lines of Credit) to protect their risk). That very move will increase your personal revolving debt ratios, and therefore drop your personal credit score dramatically.

2.  Consumers are making the mistake of paying their minimum balance on their credit cards. You must pay at least $1 over the minimum balance to get any increase in personal credit score.

3. Consumers who have a small or home-based business are operating as a sole proprietorship. That means they are using their personal credit cards to finance their business start up (a huge mistake). This typically is a result of their accountant recommending to “keep things simple” if the small business owner is unsure how much in profits they will generate the first year.

Solutions to improve your personal credit score:

1. Pay at least $1 over the minimum payments each month.

2. Set a goal to reduce your personal revolving debt (credit cards) to 5-20% the best ratio. First, develop a personal emergency fund equal to 6-8 months of your personal monthly expenses.

3. Avoid major derogatories like a personal bankruptcy or large credit settlement that can destroy your personal credit score.

3. If you are operating a business or looking to start a business to increase your income (a good idea), form a separate legal entity first, from the start. Now work on separating your personal and business credit so if you have a low personal credit score you can develop a strong business credit score.

4. Separate your personal and business credit. Your business must develop a track record with Dun & Bradstreet ®, Corporate Experian ® and Equifax Small Business to put your business in a position to receive more financing support from the banks, better joint venture opportunities and prevent losing business from other business partners because your business is “financiallynaked” with no business credit profile properly built! This can be very expensive if you do not set this up properly.

Resources:

Listen to this powerful 1 hour recording on how banks work and how to secure capital for your small business: http://budurl.com/BizCreditTeleseminar

Costly mistakes to avoid with Dun & Bradstreet®.  Listen now: http://tinyurl.com/JosephFacchianoDnB

Call Fast Business Credit, Inc. today at 1-888-313-6333 for a free consultation to see how we can help your small business secure business credit to grow.

Go to www.FastBusinessCreditSecrets.com and to the “Find a Lender” box in the upper right hand corner. You will be contacted within 24 hours from lenders around the country to help you out.

About the Author:

Scott Letourneau is the CEO of Fast Business Credit, Inc. When it comes to securing cash and vendor lines of credit and avoiding costly mistakes he is the expert. For further assistance regarding the development of business credit go to http://www.FastBusinessCredit.com or call FBC at 1-888-313-6333.

Media contacts:

Go to http://fastbusinesscredit.com/pressroom/index.htm#contact

1. Incorporate or form an LLC for your business! If you have not done this yet, call Nevada Corporate Planners, Inc. at 1-888-627-7007!
2. Stop using your personal credit cards to finance your business.
3. After you form your LLC or corporation for your business, apply for a business credit card in the name of the LLLC or corporation.
4. Set up a plan to pay down your personal revolving debt to the 5-20% range. Fist, develop a 8 month personal emergency fund.  If you require $6K per month to live personally that means you will need $48K in savings first for your personal emergency fund. After that, start to pay down your personal credit cards. Do not pay them off each month. You will improve your credit score by leaving a small balance of 5% each month.
5. Set up a merchant account to accept credit cards for your business. For the best rates and service contact Nevada Corporate Planners, Inc. at 1-888-627-7007 for a referral.
6. Develop a D & B® profile for the LLC or Corporation. We would recommend you do not do this on your and contact Nevada Corporate Planners, Inc. at 1-888-627-7007 for options in this area.
   1. When you are on a program, vendors will report to both D & B® and Corporate Experian® to build your credit profiles.
   2. If your corporation or LLC is “fried” with D & B® call Nevada Corporate Planners, Inc. at 1-888-627-7007 to consider forming a new entity.
7. If you have been in business for at least 9 months and have at least $10K per month in VISA/MASTERCARD sales as a corporation or LLC you may qualify for a merchant account cash advance.
8. If your personal credit score is over 720, and your personal revolving debt is below 30% ratio and your company has been in business for one year with profits, you may qualify for a bank business line of credit. You may receive up to 10-15% of your annual gross revenue. If you expect your sales to spike in the next 6 months and you need  the time to improve your personal credit and pay down your personal credit you may want to wait before applying.
9. Set up your business each year to show a small profit at a minimum. The higher the profit the better for future financing. Do not make the effort to have extra expenses to show a small loss. That will hurt you later on for financing.

Even some of the new credit cards that say zero interest balance for 6 months, if you go on the discussion boards or search the internet for the credit, and put the credit card name in and “complaints,” you’ll see a list of people on sites that signed up for a card and, within 30 days, their interest rate is at 29%.  They just moved over $6,000 from another card at 14%.  Their interest rate doubled.

What happens when your interest rate doubles and it’s $30,000, $40,000, $50,000 of debt?  That makes a huge difference.  One thing, if your mortgage interest rate goes up a little bit, yes, it’s on a bigger number, but if your mortgage goes up $500 or $600 a month and your credit card goes up $500 or $600 a month, that’s the problem that’s coming for people who are on the edge of not even able to afford their mortgage.  That’s what’s going to lead into even more foreclosures than we even first thought, in my opinion.  I think it’s going to happen like clockwork.

Want to know the number one secret of Credit Bureaus?

Credit Bureaus Are in Business to Make Money.

Every one of the major credit reporting agencies or credit bureaus; TransUnion, Experian and Equifax, are independent businesses. They are, at their core, the largest list broker services in the nation; which means that they sell consumer information, and not just in the case of credit reports. They sell qualified lists. They’re the largest list brokers in the nation.

Isn’t it amazing that you can call up any one of the 3 credit bureaus and request that documentation? They will sell you that information that qualified list. And nobody whose name is on that list needs to be asked if it’s okay with them, because that’s the business that they’re really in.

A credit report is nothing more than taking the same information they already have on all of us and putting it into a package that we call a credit report, and then selling it.

Here’s another secret:

Credit Bureaus Are in Business to Make Even MORE Money.

Another way credit bureaus make money and one that most people don’t realize is, they get paid by the creditors. The creditors actually pay to report information.

Not only does it cost them money to compile it, but they also have to purchase the software system that integrates with the credit scoring companies or the credit bureaus themselves, TransUnion, Experian and Equifax, they have to pay for that and they have to pay to report every line that they report on consumers.

Most people know their credit report determines the quality of loans and trade credit they get. Did you know banks and other financial institutions sometimes use tricks of the trade to make you pay even more in fees! Here’s some secrets.

Secret: Banks and Other Financial Institutions Prefer you to Have Low Credit Scores.

Financial institutions make more money on people who have what we would consider to be low credit scores. Not necessarily a bad credit report, just missed any payment. One missed payment can lower your score as much as 100 points. The lower your score the higher the rates they charge you.

Secret: When Writing Loans, the Higher the Interest Rate, the More Money We Make, the Better the Yield.

This is why they’ll lower your score if they can. A tiny difference in interest can result in thousands of dollars (if not more) in profit for the bank.

Secret: The Mystery of the Credit Scoring Formula!

Today, you want to find out how your credit score is actually determined. Good luck with that one, because that is intellectual capital that is owned by the credit scoring systems like Fair Isaac, and they’re not going to tell anybody how that works.