In his play Romeo and Juliet, Shakespeare asks the question, "What's in a name?" When you need business financing, such as a 504 Loan, it turns out your name is worth a great deal. Lenders decide if you are a good risk by assessing your credit. Although every lending situation is different, most lenders use the Five Cs of Credit to determine the level of risk. These are Character, Capacity, Capital, Conditions and Collateral.
Your character, as a borrower, is defined as your mental and moral qualities. It is perhaps the most important of all qualities of credit. Banks want to loan money to people with good credentials and references, but they also consider how you take responsibility and your history of managing debt. Because it is unlikely that a lender will know you personally, determining character can be subjective. Lenders must evaluate your character using a variety of information, like reviewing your credit history for delinquencies. They will also review your reputation.
Henry H. Saunderson is quoted, "Character is what you are. Reputation is what people think you are." This is where your good name means the most, and it is vital to protect it.
When someone pulls your credit history it is possible for your name to be burdened with another person's bad credit. Your character may be solid, but your reputation may suffer if someone with the same name has a bad credit history. Credit reporting agencies are always improving their methods of matching information to an individual, but no system is perfect.
Community Business Finance recommends reviewing your credit reports before applying for any business loan. It makes sense to clear up any confusion or mistakes on your credit before a lender sees it. As Thomas Paine wrote, "Character is much easier kept than recovered." Don't let someone else's mistakes ruin your reputation or your chance at getting the financing your business needs to successfully grow.
Community Business Finance can help you get started. Contact us today and tell us your business dream. We would love to show you how our 504 Loan Program can turn your dream into a reality.
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In Texas call Bill Ebersole at 713-457-1650, ext. 201, or email him at email@example.com.
In Louisiana, call Jeanne Bergeron at 1-800-462-1017 or email her at firstname.lastname@example.org.