How To Establish, Build, and Access Business Credit

by | May 4, 2021 | 2021 Monthly Newsletter

This Month’s Newsletter is brought to you by Business Credit 101!

If you are a business owner or if you are looking to start a new business, one of the most overlooked resources available to you is your business credit. There are so many benefits to establishing and building your business credit including:

Separate Liabilities from your personal to your business
Minimize personal DTI / Debt to Income Ratio
Get access to high limit credit accounts in the business name
Get access to Government programs and Grants
Open doors for vendor, business, and investor relationships
Reduce cost on business insurances and landlords scrutiny
Increase the value of your business for future Sale

Getting Started

The first step in establishing business credit is making sure your business is Credible in the eyes of the banks, lenders, and the business credit bureaus; Dun & Bradstreet, Experian, and Equifax Business credit divisions. There are 10 items or data points that must be in place so that your business is “Credible”.
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Tier 1

Once your business is Credible, we then move on to earning a “Paydex” score. To earn a Paydex score you will need 3-5 business credit accounts to report to D&B. At this point, Round 1 or Tier 1 is completed and your business is in a position with a legitimate business credit profile. You are ready to move on to the next tier and qualify for government grants and business funding.

Paydex Score

A Paydex score is a score that is created by Dun & Brad street once you establish a business credit profile on their platform. The first thing you have to do is establish a “credible” business, set up a free Duns number, and then you’ll need 3 to 5 starter business credit reporting accounts that will report to D&B. Once you have 3 to 5 accounts reporting, you will then be issued a Paydex score. Getting a high Paydex score requires strategic payment timing. Your score is from 0 to 100 and 80+ is good 90+ is excellent.
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​Keep Building – Tier 2

In Tier 2 you will begin to now have access to more powerful accounts with larger limits. You will be able to access a mixture of Net 30 accounts, Revolving Credit Lines, Retail accounts, and Fleet accounts.
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​You are now building your business credit and momentum is on your side. By the end of this round and based on the accounts you set up in Tier 1 you should have at least 7-8 accounts. Reporting on your business credit profile.
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You should have an 80 or higher Paydex score. Your business should be easy to find in public records, all of your data points are intact and match across all platforms.
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Tiers 3-4

Tiers 3-4 are going to be more of the same from Tier 2, just with access to even bigger and better account options, collectively giving you access up to $100,000 plus of credit. Once you have completed Tier 4 you should have 14+ accounts reporting on your business credit profile.

Our partners at Business Credit 101 can help you from start to finish.

They can save you time and money on your business credit journey by providing you with clear step by step instructions.

Don’t wait until you need funding to start building! Click here to begin with a Free Business Credit 101 Builder Consultation today!

-Erik Kaplan

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Comparing Debt Consolidation vs. Debt Settlement

by | Apr 1, 2021 | 2021 Monthly Newsletter

Debt consolidation and debt settlement are both options for resolving debt.  However, each method has a different strategy and timeline before you are free of debt. They each can affect your credit score differently.

 Debt Consolidation

Debt consolidation is a debt management strategy in which you combine multiple debts into a single payment, with a lower interest rate.  You can use a balance-transfer credit card, debt consolidation loan, home-equity loan or 401(k) loan. 

Why You Might Choose It:  

  • To get a lower interest rate than you’re currently paying, which saves you money and can help you pay off your debt sooner.
  • To reduce the number of creditors you owe and therefore the number of payments you’re juggling. 
  • Debt consolidation loans may allow you to use assets like your home or car as collateral.

What You Need To Know:

  • Debt consolidation can lead to a small dip in your credit score typically by a few points when a lender performs a hard inquiry on your credit. 
  • You’ll have a longer period of time before you’re debt free.

Debt Settlement

Debt settlement is the process of negotiating with creditors (usually credit card issuers) to reduce the amount you owe in exchange for a one-time lump sum payment to settle the account.

Why You Might Choose It: 

  • Your income is stable enough that you can continue to pay your mortgage or rent and other essential bills in addition to the payments required under a debt settlement.
  • To avoid court-mandated controls of bankruptcy while still lowering the amount of debt you have to pay.
  • Creditors know you can always file for bankruptcy, which could eliminate their ability to collect anything from you which is why they might be willing to accept less.

What You Need To Know:

  • Typically, only unsecured debts can be settled. Unsecured debts include medical bills and credit card debt; but not public student loans, or secured debt (i.e. auto loans or mortgages). 
  • The process of debt settlement requires you to stop making payments on the accounts you want to settle which can damage your credit score.  Typically from 75 – 100 points.
  • Debt settlement will be on your credit report for seven years and can impact your ability to get a loan and the interest rate you pay, if you are approved.

Tackling debt can be an important financial and personal goal. If you have any questions about either of these debt relief methods call me at (800) 822-7120.  I can help!

-Erik Kaplan

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Steps to Take if You Have Been a Victim of Identity Theft

by | Feb 24, 2021 | 2021 Monthly Newsletter

Identity thieves are opportunistic and exploit vulnerabilities in individuals’ personal information security practices.  Identity theft is more than a simple inconvenience. It’s a crime that can seriously complicate your life—potentially costing you time, money and opportunities.

 

 

According to the Federal Trade Commission (FTC) the number of reported cases of identity fraud in 2020 doubled in the United States. Each piece of information or account they gain access to can help them steal more. Unfortunately, signs of fraud can take weeks or months to reveal themselves, leaving us even more vulnerable.

 

 

Here are the best steps you can take if you have become a victim of identity theft:

 
  • Check for inaccuracies from Your credit reports and make a list of any suspicious information you discover. You will need these details later when you work on fixing your credit later.
  • Change all your account PINs and passwords.
  • Review your mail & credit card statements to confirm none of your accounts have been hijacked.
  • Place a fraud alert on your credit report. When a fraud alert is on your credit report, lenders must confirm your identity (usually via phone) before they can open new accounts in your name.
  • Freeze your credit report.  When you freeze your credit report, you take it out of circulation. So, if someone applies for credit your name, the lender will not be able to access your credit report. As a result, the application for credit will be denied.
  • Contact your creditors and ask them to freeze the compromised accounts and to dispute fraudulent charges.  Federal laws like the Fair Credit Billing Act and the Electronic Funds Transfer Act can limit your liability for bogus charges on your credit cards or debit cards. The trick is to report the theft in a timely manner. Otherwise, you could be responsible for some or perhaps all of the unauthorized purchases.
  • The final step in this process is to fix your credit. Start with filing an identity theft report.  The easiest way to create an identity theft report is to visit IdentityTheft.gov.  Once you have this report you will need to contact the 3 credit reporting agencies and ask them to block the account(s) from your credit report within four business days.  They should suppress any fraudulent accounts.
 

If your case of identity theft has not been resolved to your satisfaction or you need help in this process, email us at erik@thdcreditconsulting.com or call us at 1-800-822-7120.  THD Credit can help.

 

-Erik Kaplan

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Are you liable for your spouse’s debt?

by | Jan 25, 2021 | 2021 Monthly Newsletter

Whether you are liable for your spouse’s debts depends on factors such as;  if you live in a common-law state or a community property state and what kind of debt it is. 

Common-Law State or a Community Property State

The IRS says most states operate under what is called common law. If a married couple opens a joint account or gets a shared credit card, they will both be responsible for paying back the debt.

In common law states, you’re usually only liable for credit card debt if the obligation is in your name. So, if the credit card is only in your spouse’s name, you’re typically not liable for that debt. Additionally, assets acquired by one member of a married couple are typically deemed to belong to that person, unless they were put in the names of both.

The laws are very different in America’s nine community property states, where the laws require that any property acquired, debt accumulated, and income earned during the marriage is the property or debt of each spouse.

What Kind of Debt is It?

In most states, you are not legally responsible for bills racked up before getting married. However, if you and your spouse open a joint account or get a shared credit card, you both will be responsible for paying back the debt.  Even if the spending was done solely by your spouse. 

Similarly, If you’re the cosigner on a loan for your spouse, your credit score will be hurt if your partner misses a payment. That’s because when you cosign for a loan, you’re signing on to be equally responsible for the debt. If they miss payments, the debtor could come after you for payments. The same situation applies if you and your spouse use a joint credit card.

In Common law states, property can be individually owned unless both names are on the contract. However, in community property states, assets and liabilities that either person acquires during the marriage become the joint property of both spouses. 

There are some exceptions for necessary joint household expenses. Debt that was racked up for things like child care, housing or food must be shared by both parties, even if a joint account was not created.

If you have any questions at all please call us at (800) 822-7120.

-Erik Kaplan

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WHY DEBT COLLECTORS CAN NOW TEXT OR DM YOU!

by | Dec 1, 2020 | 2020 Monthly Newsletter, Ask The Expert

A recent change in rules by the US Consumer Financial Protection Bureau (CFPB) allows debt collectors to contact you by direct message on social networks, email, or text message.

 

No one likes debt collector calls and emails or text messages most certainly will not be welcomed, especially when you have no debts to collect. You could block the number used for text messages, but whether it’s a scam text or a legitimate debt collector, they can always contact you from yet another phone number.

 

There is some good news here… the rules do require debt collectors to provide you a way to opt-out of further messages, whether from email, text message, or direct message. You might have to call or email the debt collector back in order to opt-out as they are not being mandated to have to provide that in text or social networks directly.

 

If you have any questions about this ruling or if THD Credit can be of assistance to you in anyway – call us at 800- 822-7120. We are here to help!

-Erik Kaplan

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