Small Business Owner: Fix Those Credit Oopsies

Credit history problems are common. and there’s no magic potion for fixing past problems. But like everything else in running a successful business, if you work hard at it you can fix the problem. (If it was easy everyone would be rich, right?) Just don’t ever give up.

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Here’s what we suggest:

1) First find out exactly what’s in your credit record. The three big credit reporting agencies are Equifax, TransUnion, and Experian. Order a copy of your credit report from each of them (you’re entitled to a free report if you’ve recently been declined for credit). Spend some time on their sites reading up on consumer credit rights.

2) If there was a legitimate reason for your credit problems (i.e. health problems, divorce, etc.), write a paragraph explaining the situation and request that the credit agencies add it to your credit report. Check out their websites for instructions on how to go about this.

3) To start to restore your credit, try to get a small loan from a bank, even if you have to secure it by a deposit for the same amount. Then repay that loan over a six month period, being sure to stay on time with all you payments. Do this several times for increasing larger amounts.

4) If you still can’t find a lender to do the deal, see if you can convince a friend or family member with a good credit record to co-sign with you on the loan.

One final warning, don’t use a company that claims they’ll fix your credit. If it sounds too good to be true it usually is. If they’re legitimate, all they do is use the consumer credit laws to remove inaccuracies in your credit record. But you don’t need them to do it; you can do the same thing yourself.

The FTC has some good advice about the truths and scams in credit fixer business. You might also find some help from the National Foundation for Credit Counseling or the Consumer Credit Counseling Services. Both are non-profit organizations that help people with credit problems.

Finally, even if you think you have pristine credit, because of credit fraud, identity theft, and stupid mistakes by credit reporting agencies, it’s important to regularly check your credit reports. Federal law requires the three big reporting agencies to make them available, free of charge, on an annual basis. You can order them all at once from AnnualCreditReport.com. For a nominal fee, they’ll also provide your all-important credit score.

For more help on small business loans, angels and other private investors, venture capital, government loans and grants, preparing a business plan or financing application, and other money management advice, check out our all new, fully revised eBook, Finding Money–Secrets of a Former Banker.

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