|
CREDIT
AND MONEY MYTHS
There
are many credit and money myths-just like we find in other
professional areas in which we are inexperienced.
Let's discuss some of the most notorious.
l.
First there is no source of money out there just waiting to be
given away. Any prudent
lender is going to have some cautious underwriting guidelines for
lending money. If it sounds to good to be true-it is probably not true!
2.
Some items can be eliminated from your credit file if written
proof of how they got there cannot be forthcoming within a reasonably
short period of time. You
do not have to accept anything in your credit file.
You may place an affidavit in your credit file of one hundred
words or less telling your side of the story.
Most importantly beware of the credit repair artists who
promise to clean out all the derogatory items in your credit file-only
time will do that.
3.
You can get major credit cards (Master charge or Visa) even if
you’re past credit looks like a national war debt.
The secret is you will have to put up an amount of money into a
savings account not of your choosing-equal to the credit line you
desire on the card. If
you default on the card, your savings account will pay off the
default.
4.
Yes bankers do in fact have loan committees to review your
loan, but the loan officer you are dealing with carries the deciding
vote in the majority of cases. Banking
is a personality business and don't forget it!
5.
When your bank says no to your loan request-the hunt has just
begun-keep looking-banks are only one fish in the financial sea.
You may have to adjust your approach or loan request to get
approved and funded or you may have to seek another institution or
source.
6.
There may be a high degree of integrity in the financial
field-but it is no different from many other professional fields.
Just because someone says it is true that doesn't make it true!
7.
Good credit does not always carry the day for the loan request.
In most cases the loan will require proof of sufficient income.
In the case of real estate loans the value of the collateral
and the loan to value consideration may entirely override a strong
need for good credit or sufficient income.
8.
Sources of funds for beginning small business loans are as
scarce as hen’s teeth. You
probably will have to come up with additional assets to collateralize
the loan. It may be the
best idea in the world but that will not get the loan funded.
Best source for small business loans is through the SBA.
9.
Most credit cards bear interest from 14% to 20% annual
percentage rate, even when offering low beginning come-on rates.
Borrowing money on your credit card is equivalent to a personal
high interest rate unsecured loan.
10.
Toughest loan to make are the self employed who do not show
sufficient income to service the debt using tax returns as proof of
income. Real estate as
collateral is the answer for the self-employed.
Find a lender who does "no income qualifying" real
estate loans.
11.
Leasing cost more than a conventional loan.
The value is in the charge off of full lease payments and other
tax benefits. Most lease
contracts will cost 16% to 25% interest annual percentage rate.
12.
The "golden rule" of credit finance is that, "he
who has the gold makes the rules."
This explains the attitude of many banks-they can pick and
choose their targets.
13.
Banks now only represent a small fraction of the lending
institutions nationwide.
14.
Venture capitalists will not be interested in the soundest
projects if the prospects for high profits and capital gain are not in
the project.
15.
Small commercial loans of under half million is a black hole in
the lending community. Most
lenders can make a million dollar loan and make more money off the
loan with no more effort than the $100,000 loan.
But keep looking someone will make the loan!
16.
Government assistance loans offer a potential borrowing market
of in excess of $100 billion annually.
There are close to 1000 government assistance loan programs
direct and indirect.
17.
Fifty percent of the battle in commercial loan projects is the
presentation of a professionally prepared and complete loan package
that a lender can follow easily.
A sloppy prepared incomplete package goes in file 13.
Many times a good loan package that is declined can be
restructured and funding approved.
18.
Venture capital does exist and venture capital loans are
funded. Only a solid
business plan and proposal with a high profit motive will even be
considered. All
speculative deals are dreams to venture capitalists or any other
lender for that matter.
|