HOW TO RAISE MONEY ON STARTING A BUSINESS

The task of raising money for a business is not as difficult as most people seem to think. This is especially true when you have an idea that can make you and your backers rich. Actually, there’s more money available for new business ventures than there are good business ideas.

A very important rule of the game to learn: Anytime you want to raise money, your first move should be to put together a proper prospectus.

This prospectus should include a resume of your background, your education, training, experience and any other personal qualities that might be counted as an asset to your potential success. It’s also a good idea to list the various loans you’ve had in the past, what they were for, and your history in paying them off.

You’ll have to explain in detail how the money you want is going to be used. If it’s for an existing business, you’ll need a profit and loss record for at least the preceding six months, and a plan showing how this additional money will produce greater profits. If it’s a new business, you’ll have to show your proposed business plan, your marketing research and projected costs, as well as anticipated income figures, with a summary for each year, over at least a three year period.

It’ll be advantageous to you to base your cost estimates high, and your income projections on minimal returns. This will enable you to “ride thru” those extreme “ups and downs” inherent in any beginning business. You should also describe what makes your
business unique – how it differs from your competition, and the opportunities for expansion or secondary products.

This prospectus will have to state precisely what you’re offering the investor in return for the use of his money. He’ll want to know the percentage of interest you’re willing to pay, and whether monthly, quarterly or on an annual basis. Are you offering a certain percentage of the profits? A percentage of the business? A seat on your board of directors?

An investor uses his money to make more money. He wants to make as much as he can, regardless whether it’s a short term or long term deal. In order to attract him, interest him, and persuade him to “put up” the money you need, you’ll not only have to offer him an opportunity for big profits, but you’ll have to spell it out in detail, and further, back up your claims with proof from your marketing research.

Venture investors are usually quite familiar with “high risk” proposals, yet they all want to minimize that risk as much as possible. Therefore, your prospectus should include a listing of your business and personal assets with documentation – usually copies of your tax returns for the past three years or more. Your prospective investor may not know anything about you or your business, but if he wants to know, he can pick up his telephone and know everything there is to know within 24 hours. The point here is, don’t ever try to “con” a potential investor. Be honest with him. Lay all the facts on the table for him. In most cases, if you’ve got a good idea and you’ve done your homework properly, an “interested investor” will understand your position and offer more help than you dared to ask.

When you have your prospectus prepared, know how much money you want, exactly how it will be used, and how you intend to repay it, you’re ready to start looking for investors.

As simple as it seems, one of the easiest ways of raising money is by advertising in a newspaper or a national publication featuring such ads. Your ad should state the amount of money you want – always ask for more money than you need so you have room
for negotiating. Your ad should also state the type of business involved (to separate the curious from the truly interested), and the kind of return you’re promising on the investment.

Take a page from the party plan merchandisers. Set up a party and invite your friends over. Explain your business plan, the profit potentials, and how much you need. Give them each a copy of your prospectus and ask that they pledge a thousand dollars as
a non-participating partner in your business. Check with the current tax regulations. You may be allowed up to 25 partners in Sub Chapter 5 enterprises, opening the door for anyone to gather a group of friends around himself with something to offer them in return for their assistance in capitalizing his business.

You can also issue and sell up to $300,000 worth of stock in your company with out going through the Federal Trade Commission. You’ll need the help of an attorney to do this, however, and of course a good tax accountant as well wouldn’t hurt.

It’s always a good idea to have an attorney and an accountant help you make up your business prospectus. As you explain your plan to them, and ask for their advice, casually ask them if they’d mind letting you know of, or steer your way any potential investors they might happen to meet. Do the same with your banker. Give him a copy of your prospectus and ask him if he’d look it over and offer any suggestions for improving it, and of course, let you know of any potential investors. In either case, it’s always a good idea to let them know you’re willing to pay a “finder’s fee” if you can be directed to the right investor.

Professional people such as doctors and dentists are known to have a tendency to join occupational investment groups. The next time you talk with your doctor or dentist, give him a prospectus and explain your plan. He may want to invest on his own or
perhaps set up an appointment for you to talk with the manager of his investment group. Either way, you win because when you’re looking for money, it’s essential that you get the word out to as many potential investors as possible.

Don’t overlook the possibilities of the Small Business Investment Companies in your area. Look them up in your telephone book under “Investment Services.” These companies exist for the sole purpose of lending money to businesses which they feel have a good chance of making money. In many instances, they trade their help for a small interest in your company.

Many states have Business Development Commissions whose goal is to assist in the establishment and growth of new businesses. Not only do they offer favorable taxes and business expertise, most also offer money or facilities to help a new business get
started. Your Chamber of Commerce is the place to check for further information on this idea.

Industrial banks are usually much more amenable to making business loans than regular banks, so be sure to check out these institutions in your area. Insurance companies are prime sources of long term business capital, but each company varies its policies regarding the type of business it will consider. Check your local agent for the name and address of the person to contact. It’s also quite possible to get the directors of an other company to invest in your business. Look for a company that can benefit from your product or service. Also, be sure to check at your public library for available foundation grants. These can be the final answer to all your money needs if your business is perceived to be related to the objectives and activities of the foundation.

Finally, there’s the Money Broker or Finder. These are the people who take your prospectus and circulate it with various known lenders or investors. They always require an up-front or retainer fee, and there’s no way they can guarantee to get you the loan or the money you want.

There are many very good money brokers, and there are some that are not so good. They all take a percentage of the gross amount that’s finally procured for your needs. The important thing is to check them out fully; find out about the successful loans or investment plans they’ve arranged, and what kind of investor contacts they have – all of this before you put up any front money or pay any retainer fees.

There are many ways to raise money – from staging garage sales to selling stocks. Don’t make the mistake of thinking that the only place you can find the money you need is through the bank or finance company.

Start thinking about the idea of inviting investors to share in your business as silent partners. Think about the idea of obtaining financing for a primary business by arranging financing for another business that will support the start-up, establishment and development of the primary business. Consider the feasibility of merging with a company that’s already organized, and with facilities that are compatible or related to your needs. Give some thought to the possibilities of getting the people supplying your production equipment to co-sign the loan you need for start-up capital.

Remember, there are thousands upon thousands of ways to obtain business start-up capital. This is truly the age of creative financing.

Disregard the stories you hear of “tight money,” and start making phone calls, talking to people, and making appointments to discuss your plans with the people who have money to invest. There’s more money now than there’s ever been for new business
investment. The problem is that most beginning “business builders” don’t know what to believe or which way to turn for help. They tend to believe the stories of “tight money,” and they set aside their plans for a business of their own until a time when start-up money might be easier to find.

ANTI-AGING: LIVE A LONGER AND HEALTHIER LIFE

You should balance your activities with the proper amount of rest. Some of the leading experts in the field of aging now believe that regular exercise along with the proper amount of rest may actually add years to the life span. Results from a number of tests indicate that speed and muscular strength of many of the elderly can be extended.

Leading authorities agree that this new data is going to shatter many of the myths about aging and physical performance. The conclusion now is that the performance and ability of the elderly has long been underestimated, diet, proper sleep and exercise along with rest and relaxation are all important factors in preserving our bodies.

Laughter is one of the best things for your mental and physical state. People are naturally attracted to someone who has a good sense of humor. You can develop a good outlook and a good sense of humor by associating with and surrounding yourself with pleasant happy people.

Recognize that stress is a killer. A life filled with stress can really wreak havoc on your body causing a number of illnesses such as hear attacks, strokes, asthma, gastric problems, menstrual disorders, ulcerative colitis, angina, irritable colon, increased blood pressure, ulcers, headaches, etc.

There are different types of stress such as mental, emotional and physical. Emotional stress seems to take the greatest toll on everyone. All stress is not bad; in fact, life would not be very interesting if it were not met with challenges. However, too much stress, too often with no effective and appropriate outlet, does not allow the body and soul to recuperate. You might review a typical week to see if you can identify things that might be making you anxious or causing you stress. Once identified, stressors can be attacked and eliminated.

Are you a worrier? Chronic worriers don’t have more serious problems than others – they just think they do. Many worriers try to cope by trying not to think about their problems, but this just makes things worse. Doctors say that chronic worriers feel less anxious if they actually spend a half-hour a day thinking specifically about their problems.

Get plenty of exercise. People who are physically fit look good and feel good. A good exercise regimen will lengthen your life. Improve your appearance, build self confidence and help delay the aging process.

Remember that you need to do something physical every day. If you don’t use your joints, quite simply they’ll tighten up with age to create the stooped, bent and worn out appearance we so often associate with old age. Studies have shown that people with arthritis experience less pain if they continue to keep their joints flexible. As one gets older, the bones tend to get brittle which is why it is common for senior citizens to break bones and especially their hips when they fall.

Eating right, getting proper sleep and learning to relax are all very valuable in maintaining a healthy body and mind. And keep in mind that eating healthy foods and avoiding those high in fats, sodium and cholesterol will help to decrease your risk of heart disease, high blood pressure and associated problems.

ANTI-AGING: HOW TO LOOK YOUNGER AND GROW OLD GRACEFULLY

Today the average duration of human life in the United States is just about 70 years for women and a little less for men. Conservative experts believe that man is really build to last about 100 years; and that medial advances and more healthful living habits could bring this about within a generation or two.

What good is it to add years to life if we do not also add life to years? In fact, unless people learn to enjoy life and to grow old gracefully, the extra years may be an additional burden.

From 18 to 30 years is roughly the period of highest physical and mental vigor. The experiences we accumulate from the day we are born help us to conserve and to use our physical and mental abilities more wisely, so that for some time after 30 years we are able to perform increasingly well in spite of slowly slipping vigor. After age 50 the increasing accumulation of experience is no longer able to offset the now more rapidly energy and therefore aging begins to assert itself noticeably and in many ways.

A number of things may come about gradually such as people who have not used eyeglasses before may at some time in their forties need them for reading, and in the fifties they usually need bifocals.

Also in the forties, people are likely to put on weight because there is a general slowdown in the oxidation rate of the aging body tissue. Also we tend to do less strenuous work with no reduction in the amount of food consumed.

And in the fifties there is likely to be some loss of hearing. Usually the high-pitched tomes go first, so words with the sounds of F, S, and TH are confused. A hearing aid may be needed in some cases.

Aging is generally accompanied by a loss in physical and mental flexibility. This is noticed in a tendency to become stiff in the joints; in slower comeback after a strenuous trip, excessive “night life,” or hard work; in slower healing of wounds, sore muscles, and sprains; in slower recovery of pep after an illness; and in greater difficulty to adjust to new people, new places, and new ideas.

Men, especially, will notice loss of muscular strength. There will be increased unsteadiness and delicate muscle movements will be more clumsy and the stride in waking will become shorter. The conclusion now is that the performance and ability of the elderly has long been underestimated and can be greatly improved by a proper diet, sleep and exercise along with rest and relaxation.

Many elderly people tend to lose their joy and will to live and chronic worriers may mope around and withdraw. Medical authorities now say that laughter is one of the best medicines for the elderly. You can always keep your sense of humor tuned up by surrounding yourself with pleasant and interesting people. Just act your age and don’t be afraid to laugh at yourself even when no else is around.

HOW TO BE SUCCESSFUL IN A SMALL BUSINESS

You may be in Mail Order, Direct Mail, or you may be a local employer with 150 employees; whichever, however, or whatever – you’ve got to know how to keep your business alive during economic recessions.

Anytime the cash flow in a business, large or small, starts to tighten up, the money management of that business has to be run as a ‘tight ship’.

Some of the things you can and should do including protecting yourself from expenditures made on sudden impulse.

We’ve all bought merchandise or services we really didn’t need simply because we were in the mood, or perhaps in response to the flamboyance of the advertising or the persuasiveness of the salesperson.

Then we sort of “wake up” a couple of days later and find that we’ve committed hundreds of pounds of business funds for an item or service that’s not essential to the success of our own business, when really pressing items had been waiting for that money.

On the other hand, while you may think you cannot afford it, be sure that you don’t ‘short change’ yourself on professional services.

This would apply especially during a time of emergency.

Anytime you commit yourself and move ahead without completely investigating all the angles, and preparing yourself for all the contingencies that may arise, you’re skating on this ice.

Regardless of the costs involved, it always pays off in the long run to seek out the advice of experienced professionals before embarking on a plan that could ruin you.

Particularly when sales are down, you must be “hard nosed” with people trying to sell you luxuries for your business.

When business is booming, you undoubtedly will allow sales people to show you new models of equipment or a new line of supplies; but when your business is down, skip the entertaining frills and concentrate on the basics.

Great care must be taken however to maintain costs, yet allow these sellers to consider you a friend and call back at another time.

Your company’s books should reflect your way of thinking, and whoever maintains them should generate information according to your policies.

Thus, you should hire an outside accountant or accounting firm to figure your return on your investment, as well as the turnover on your accounts receivable and inventory.

Such an audit or survey should focus in depth on any or every item within your financial statement that merits special attention. In this way, you’ll probably uncover any potential financial problems before they become readily apparent, and certainly before they could get out of hand.

Many small companies set up advisory boards of outside professional people.

These are sometimes known as Power Circles, and, once in place, the business always benefits, especially in times of short operating capital.

Such an advisory board or power circle should include a lawyer, an accountant, civic club leaders, owners or managers of businesses similar to yours, and retired executives.

Setting up such an advisory board of directors is really quite easy, because most people you ask will be honoured to serve.

Once your board is set up, you should meet once a month.

Each meeting should be a discussion of your business problems and an input from your advisors relative to possible solutions.

These members of your board of advisors should offer you advice as well as alternatives, and provide you with objectivity.

No formal decisions need to be made either at your board meetings, or as a result of them, but you should be able to gain a great deal from the suggestions you hear.

You will find that most of your customers have the money to pay at least some of what they owe you immediately.

To keep them current, and the number of accounts receivable in your files to a minimum, you should call them on the phone and ask for some kind of explanation why they’re falling behind.

If you develop such a habit as part of your operating procedure, you’ll find your invoices will magically be drawn to the front of their piles of bills to pay.

While maintaining a courteous attitude, don’t be hesitant, or too much of a “nice guy” when it comes to collecting money.

Something else that’s a very good business practice but which few business owners do is to methodically build a credit rating with their local banks.

Particularly when you have a good cash flow, you should borrow from your banks every 90 days or so.

Simply borrow the money, and place it in an interest bearing account, and then pay it all back at least a month or so before it’s due.

By doing this, you will increase the borrowing power of your signature, and strengthen your ability to obtain needed financing on short notice.

This is a kind of business leverage that will be of great value to you if or whenever your cash position becomes less favorable.

By all means, join your industry’s local and national trade associations.

Most of these organizations have a wealth of information available on everything from details on your competitors to average industry sales figures, new products, services, and trends.

If you are given a membership certificate or wall plaque, you should display these conspicuously on your office wall.

Customers like to see such “seals of approval” and feel additional confidence in your business when they see them.

Still another thing often overlooked. If at all possible, you should have your spouse work in the business with you for at least three or four weeks per year.

The important thing is that if for any reason you are not available to run your business, your spouse will be familiar with certain people and situations about your business.

These people should include your lawyer, accountant, any consultants or advisors, creditors, and your major suppliers.

The long term advantages of having your spouse work four weeks per year in your business with you will greatly outweigh the short term inconvenience.

Many couples share responsibility and time entirely, which is in most cases even more desirable.

Whenever you can, and as often as you need it, take advantage of whatever free business counseling is available.

The Small Business Advisory Service, at the DTI, publish many excellent booklets, checklists and brochures on quite a large variety of businesses.

Many private organizations hold seminars at minimal cost, and often without charge.

You should also take advantage of the services offered by your bank and local library.

The important thing about running a business is to know the direction in which you’re heading; to know on a day to day basis your progress in that very direction; to be aware of what your competitors are doing and to practice good money management at all times.

All this will prepare you to recognize potential problems before they arise.

In order to survive with a small business, regardless of the economic climate, it is essential to surround yourself with smart people, and practice sound business management at all times.

How to raise money and get rich overnight

There are so many simple, yet really sure-fire ways of acquiring wealth, it’s a wonder everybody with even the least bit of ambition isn’t already rich. When you come right down to it, the only things needed for anyone to make bundles of money are the long-range vision and the energy to put a money-making plan into force.

One of the easiest methods of building wealth, and the one most often used by the “smart” people, is to furnish the expertise, equipment or growth capital to promising beginning businesses. Basically, you buy in as either a part owner or limited partner; then, as the business grows and prospers with your help, you reap your share of the rewards.

The beautiful part about this whole concept is that you can repeat this procedure over and over again. You can start out with, say marketing and sales leadership for a small, garage-type business; then with your holdings and earnings from that business, invest in another, and keep doing this until you own a part of twenty-five to an unlimited number of businesses. Looking at the idea from a dollar return point of view, if you were getting $200 per month from 25 different businesses, your monthly income would amount to no less than $5,000 and that’s not too bad for a fledgling millionaire.

Look around your own area. With just a little bit of business sense and perception, you’re sure to find hundreds of small businesses that could do better – perhaps even become giants in their field – with your help.

Most small businesses need, and would welcome marketing, promotional, advertising, and sales help. If a quick survey of a business turns you on with enthusiasm about the potential profits to be made with just a few changes that you can suggest, then you are on your way.

Basically, you set up an appointment to see and talk with the business owner about some ideas and help that could double or triple his profits. When you approach him in that manner, he’s almost certain to want to see you and hear what you have to say.

In preparation for your meeting, set your ideas down on paper. Put them together in an impressive marketing or profit-potential folio. Out-line your ideas, the costs involved and the ultimate profit to be gained.

Then, when you arrive for the meeting, be sure to look and act the part of a successful business person. A few pleasantries to break the ice, and then begin with your presentation.

Through your proposal, you must instill confidence that you can do all you claim for him. Guide him through the presentation to the ultimate profits – all for a 10 or 20 percent limited partnership in the business, which really won’t cost him anything. Of course, if he’s reluctant to give up any part of his ownership, you come back with the idea of being hired as a consultant.

Almost all small businesses need help of some kind. The owners get bogged down in a myriad of everyday problems and things to do. They find there just aren’t enough hours in the day to handle everything that should be taken care of, and end up neglecting or putting off some of the things they should be doing to keep the business prosperous. As a result, the long struggle for business survival begins, with more than 60% of them selling out at a loss or just closing up shop.

The other way to “cut yourself in” on a piece of someone else’s business is to supply needed money. If you can come up with 10 or 15 thousand dollars, you can easily “buy into” some small businesses. Be sure to look the business (and its market potential) over; but once you spot one that can really be a winner with just a little bit of operating cash or money for expansion, then start figuring!

You can reach a never ending supply of such businesses to choose from, simply by running a small advertisement in your daily newspaper in the classified section under the heading of Business Opportunities Wanted. Such an ad might read:

SUCCESSFUL BUSINESS EXECUTIVE LOOKING FOR NEW
BUSINESS VENTURES. WILL CONSIDER BUY-OUT OR
PARTNERSHIP.

By the same token, make it a habit to look through the Business Opportunities Available on a regular basis. Mark a few each day and follow up. Check them out, and see what kind of a deal is being offered. Remember, proper management and planning are basically the ingredients to success in business; and most small businesses just don’t have these ingredients in the proportions needed to attain their greatest profit potential.

How to Deal with Your Debts

A sudden illness or the loss of your job may make it impossible for you to pay your bills on time. Whatever your situation, if you find that you cannot make your payments, contact your creditors at once. Try to work out a modified payment plan with your creditors that reduces your payments to a more manageable level. If you have paid promptly in the past, they may be willing to work with you. Do not wait until your account is turned over to a debt collector. At that point, the creditor has given up on you.

Automobile loans present special problems. Most automobile financing agreements permit your creditor to repossess your car any time that you arc in default on your payments. No advance notice is required. If your car is repossessed you may have to pay the full balance due on the loan, as well as towing and storage costs, to get it back. Do not wait until you are in default. Try to solve the problem with your creditor when you realize you will not be able to meet your payments. It may be better to sell the car yourself and pay off your debt than to incur the added costs of repossession.

How to Evaluate Credit Repair Companies

If you are having trouble paying your bills, you may be tempted to turn to a company that claims to offer assistance in solving debt problems. Such businesses may offer debt consolidation loans, debt counseling, or debt reorganization plans that are “guaranteed” to stop creditors’ collection efforts. Before signing up with such a business, investigate it thoroughly. Be sure you understand what services the business provides and what they will cost you. Do not rely on oral promises that do not appear in your contract. Also, check with the Better Business Bureau and your local consumer protection office. They may be able to tell you whether other consumers have registered complains about the business.

Consumers who turn to such businesses for help sometimes encounter additional problems. For example, debt consolidation or other large short-term loans may have high hidden costs and may require your home as collateral. An unscrupulous company may misrepresent the terms of such loan agreements; if so, you could end up losing your home.

Businesses offering debt counseling or reorganization may charge substantial fees or a percentage of your debts, but fail to follow through on the services they sell. Some may do little more than refer indebted consumers to a bankruptcy lawyer, who charges an additional fee. Businesses advertising voluntary debt reorganization plans or “Chapter 13” relief may fail to explain that Chapter 13 debt adjustment actually is a form of bankruptcy. To qualify for it, you must have a source of regular income and a plan for repaying your creditors that meets the approval of the bankruptcy court. Businesses that sell bankruptcy-related services may not tell you all that is involved or assist you through what can be a complex and lengthy legal process. Debt problems can be distressing, but be careful when selecting a solution. Some “solutions” may only add to your problems.

How to Improve a Bad Credit Report

You are entitled by law to correct any inaccurate information that appears in your credit bureau file. If a creditor rejects your application because of negative information in your credit bureau report, it must identify the credit bureau involved. At your request, the credit bureau must disclose the contents of your credit file. If you act within 30 days of being turned down, there is no charge for this service.

Check to see whether the information in your credit report is accurate and complete. You have the fight, under the Fair Credit Reporting Act, to dispute the completeness or accuracy of any information in your report. When you do so, it helps to tell the credit bureau, in writing, why you think the information is not correct. Unless your dispute is frivolous or irrelevant, the credit bureau then must reinvestigate the matter. The credit bureau must correct any information that it finds is not reported accurately. Information that cannot be verified must be deleted. If you disagree with the results of the credit bureau’s reinvestigation, you may file a brief dispute statement explaining your side of the story. At your request, the credit bureau will note your dispute in future credit bureau reports.

Be aware that when negative information in your report is accurate, only the passage of time can assure its removal. Credit bureaus are permitted by law to report bankruptcies for 10 years and other negative information for 7 years. There is nothing that you (or anyone else) can do to require a credit bureau to remove accurate information from your credit file until the reporting period has expired. Don’t be misled by ads aimed at people with bad credit histories, judgments, or bankruptcies. Promises to “repair” or “clean up” a bad credit history can almost never be kept.

How to Build A Credit History and Establish Credit

Building a good credit history is important. If you have no reported credit history, it may take time to establish your first credit account. This problem affects young people just beginning careers as well as older people who have never used credit. It also affects divorced or widowed women who shared credit accounts that were reported only in the husband’s name. If you do not know what is in your credit file, check with your local credit bureaus. Most cities have two or three credit bureaus, which are listed under “Credit” or “Credit Reporting Agencies” in the Yellow Pages. For a small fee, they will tell you what information is in your file and may give you a copy of your credit report.

If you have had credit before under a different name or in a different location and it is not reported in your file, ask the credit bureau to include it. If you shared accounts with a former spouse, ask the credit bureau to list these accounts under your name as well. Although credit bureaus are not required to add new accounts to your file, many will do so for a small fee. Finally, if you presently share in the use of a credit account with your spouse, ask the creditor to report it under both names.

Creditors are not required to report any account history information to credit bureaus. If a creditor does report on an account, however, and if both spouses are permitted to use the account or are contractually liable for its repayment, under the Equal Credit Opportunity Act you can require the creditor to report the information under both names. When contacting your creditor or credit bureau, do so in writing and include relevant information, such as account numbers, to help speed the process. As with all important business communications, keep a copy of what you send.

If you do not have a credit history, you should begin to build one. If you have a steady income and have lived in the same area for at least a year, try applying for credit with a local business, such as a department store. Or you might borrow a small amount from your credit union or the bank where you have checking and savings accounts. A local bank or department store may approve your credit application even if you do not meet the standards of larger creditors. Before you apply for credit, ask whether the creditor reports credit history information to credit bureaus serving your area. Most creditors do, but some do not. If possible, you should try to get credit that will be reported. This builds your credit history.

If you are rejected for credit, find out why. There may be reasons other than lack of credit history. Your income may not meet the creditor’s minimum requirement or you may not have worked at your current job long enough. Time may resolve such problems. You could wait for a salary increase and then reapply, or simply apply to a different creditor. However, it is best to wait at least 6 months before making each new application. Credit bureaus record each inquiry about you. Some creditors may deny your application if they think you are trying to open too many new accounts too quickly.

If you still cannot get credit, you may wish to ask a person with an established credit history to act as your co-signer. Because a co-signer promises to pay if you don’t, this can substantially improve your chances of getting credit. Once you have repaid the debt, try again to get credit on your
own.

Why Your Credit History is Important

Although creditors usually consider a number of factors in deciding whether to grant credit, most creditors rely heavily on your credit history. To learn how you have handled credit in the past, most creditors obtain a report from your local credit bureau. Credit bureaus gather and sell credit information about consumers and are a principal source of information about your credit history. Your credit bureau report is based on information supplied over time by your creditors. It also provides information on where you live and work and may note other matters of public record such as judgments or bankruptcies. Your report records payments you have made on credit cards, installment loans, and other credit accounts and helps creditors predict whether you are likely to be a good
credit risk. A history of timely credit payments helps you get additional credit.

Some creditors are reluctant to grant credit to consumers-who have not established a “track record” with other creditors first. In addition, many creditors will not extend credit to consumers with a history of delinquent payments, repossession, judgments, or bankruptcy. If you are in either situation, be wary of ads that promise you “instant credit” or “a major credit card regardless of your lack of credit history or your past credit record.” The fact is that all legitimate creditors want to know whether you are likely to be a good credit risk. Whether you get credit will depend on whether your qualifications meet the creditor’s criteria. No one can guarantee you credit in advance.