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Error In Personal Credit Reports May Delay Business Loan |
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If you are a small-business owner and have an online credit report with an impeccable credit history and a five-year track record of profits and growth, you will not expect to be turned down for a loan for business expansion. However, such cases are not uncommon where small-business owners have been refused loan as the bank has found several federal tax liens on their online credit reports. Even if the information is incorrect, the loan can be delayed until the inaccuracies can be disputed and proved wrong. Banks, finance companies, and the U.S. Small Business Administration obtain copies of a business owner's online credit report and rely heavily on it to make their credit decisions. John Hostetter, a vice president for business banking at Norwest Bank in Colorado Springs, Colo., says "Most lenders believe that in a closely held business, the company will be a mirror image of the way the individual conducts his personal life." He further believes that "Although the business and individual are two different entities legally, in reality the difference becomes blurred with closely held businesses. The personal online credit report is a critical tool in evaluating the business owner's character and ability to repay the loan." An inaccuracy in a business owner's personal online credit report can be disastrous as the owner will have to spend a substantial amount of time and effort to prove that the information is incorrect and if he is not able to convince the financial institution, this may result in higher interest rates, requests for additional collateral, or stricter loan terms. It is also possible that the loan officer, who rejects an application because of an unfavorable online credit report--not knowing that it's erroneous- may not be in the city of the borrower and as such he may not be aware of the business owner's credit reputation. David Medine, the associate director of credit practices for the FTC says that no one knows how many online credit reports are wrong and this is the No. 1 subject of complaints the FTC receives. It is, therefore, advisable that you should obtain a copy of your online credit report from each of the three major credit-reporting companies--Equifax, TransUnion, and Experian, before undertaking a major transaction. If you find any errors, you should apply the Fair Credit Reporting Act's guidelines to correct credit problems. At first, you should dispute the problem with the credit bureaus and if they do not resolve your problem, you should contact the credit grantor directly. Experts feel that as a matter of routine, every consumer should order a copy of his or her credit report at least once a year. This is all the more necessary if you are thinking of making a large purchase such as a home, car, or condominium, in which case you should get your credit report from all the three major credit bureaus. You can call, write, or go for an online credit report from the three major CRAs. If you have been denied credit, insurance, or employment as a result of what your credit report reveals, or if you're the victim of identity theft, there will be no charge for the credit report, as long as you apply for the credit report within 60 days. You should provide your full name, current address, previous address, spouse's name (if applicable), Social Security number, and date of birth, when ordering a report. A new law has been enacted, according to which all the consumers are now entitled to get a free copy of their credit report once a year. The credit companies, after receiving written notification, have 30 days to either verify the information or accept the individual's version under an agreement between the FTC and the three major credit-reporting companies. Furthermore, if this process fails to resolve the problem, individuals have the right to request that a 100-word summary of their own version of the disputed information be added to the credit file. You can contact the credit companies directly to get a copy of your online credit report. |
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