How You May Be Sabotaging Your Ability to Procure Funding

Here are six ways to improve your “lending dating profile.”
At some point, nearly everyone carries multiple types of financial debt obligation, whether it be a credit card, a home mortgage or a business loan. Establishing a trust relationship between a lender and a potential borrower follows a very similar progression to human interpersonal relationships, but with the benefit of some very well-established patterns of behavior and factors that influence the outcome.

Knowing that almost everyone will need some type of credit extended to them in the future, it makes sense to start learning the factors that could negatively impact your attractiveness to a lender and implement habits that avoid limitations of access to credit when it’s required. Here are some of the top behaviors I recommend to getting your “lending dating profile” into top shape.

Related: 20 Money Mistakes to Avoid in Your 20s

  1. Start treating ongoing credit management seriously
    While the need for credit certainly doesn’t rank up there with the basic needs of food, shelter, and security in models like Maslow’s hierarchy, it certainly informs a critical aspect of financial security in the modern age and should be shown some priority. I counsel my clients to start modestly in these efforts, taking a “crawl, walk, run” approach to active, ongoing management of their personal credit profile.

The first step in this endeavor is nothing more than basic awareness — reserving some time periodically for intentional focus on your credit utilization and opportunities for improvement. This can evolve into a more active strategy by taking prioritized, tangible improvement steps in your credit with regular measurement and reprioritization based on outcomes. Understand, as with managing most things, driving change requires measurement — finding a reputable credit score reporting service like Credit Karma that you can use to track progress should be one of the first tools incorporated into your strategy.

  1. Manage your personal information with a defensive bias
    Attempts to compromise your personal details is usually done with a financial goal in mind. Thieves want to use your identity to obtain credit. Once it happens, it can be an expensive endeavor to undo. It’s much cheaper — and simpler — to start with a strong defensive approach. I’ve worked with multiple clients who have suffered from not being proactive. The financial and credit reputation impacts can be long-lasting. As a result of the growth in identity theft, many financial and credit reporting agencies have continually improved their response and repair options, but the burden of proof and completion of reconciliation activities falls mostly on the impacted individual. The required steps to restore one’s financial reputation and borrowing power is much more difficult — and costly than spending the money on preventative options.

Related: 5 Ways to Protect Your Business and Personal Credit Scores During a Crisis

  1. Look to increase your borrowing limits
    Take active steps to request increases to your credit limits with your current lenders. Assuming you have a consistent positive history of repayment, many lenders will make modest increases to your current limit without the impact of an inquiry against your record with the credit reporting bureaus, which can have a downward influence on your score. Credit utilization ratios are quite commonly misunderstood when I counsel individuals on credit management — a common misperception being that holding a higher opportunity to borrow is contrary to the goal of debt management. My advice is that it’s critical to remember that borrowing potential is not the same as indebtedness. A higher relative opportunity to borrow against the actual debts owed makes you appear more bankable and will positively influence credit reporting scores.
  2. Don’t just make the minimum required payments
    By not paying off your full balance monthly, you incur not only additional growth in your overall obligation, but interest charges accumulate, further compounding repayment timing. Getting into a habit of paying down additional principal on the loan amount can not only positively reduce the total repayment schedule but can influence a healthier mindset towards outstanding debt management.
  3. Never miss on scheduled payments
    On-time and consistent payment of your scheduled debt obligations accounts for greater than a third of your overall score with measures like FICO®, and as such reflects significantly to other potential lenders. I continue to be surprised working with borrowers who don’t fully understand the impact of late payments, commonly assuming that missing one payment may simply add a penalty in the form of additional fees or a potential increase to their borrowing rates. Most lenders report missed payments to the credit bureaus. It usually happens with little delay and minimal notice to the debtor. Should you ever make such as mistake, I advise working with your lender as soon as possible to attempt a correction and avoid the credit hit.

Related: Implementing These 2 Strategies Can Help Entrepreneurs Reduce Financial Stress

  1. Avoid higher risk borrowing options
    While both legislative reactions to past financial events and a general reduction in risk tolerance by lenders have limited the overall inventory for higher-risk/lower collateral lending solutions, they do exist and can be attractive and accessible. Many lenders that offer these options do so with an understanding of the higher commensurate risk and provide their funding support with terms that do not generally favor the borrower long-term. I advise my clients to honestly assess their current state to define a loan need and repayment reality, as assumptions on unproven future income should be understood as a gamble. Higher risk lending solutions also reflect negatively for other prospective lenders, as these parallel obligations assume a potential adverse cross-impact. If credit is required to advance the creation of a new enterprise or the development of an innovation, numerous alternate solutions exist including grants and forgivable loans that may be more beneficial and reflect more favorably on you as a lending prospect. These strategies increased my credit score from 450 to 819.

What’s Happening With So Many People Declaring Bankruptcy During the Pandemic?

The effects of the pandemic have been devastating for thousands of companies across the country, but alongside their financial problems there have been various legal complications.
The effects of the pandemic have been devastating for thousands of companies across the country, but alongside their financial problems there have been various legal complications. One of them was the increase in requests for bankruptcies or possible bankruptcies, given the inability of many businesses to fully comply with their obligations.

“From the first months of the confinement, this situation was predicted and despite the fact that the closure of the federal courts did not affect commercial bankruptcies, which are considered as ‘urgent cases’, as stated in General Agreement 8/2020 of the Council of the Federal Judiciary (CJF), everything indicates that the wave of these processes is a reality, “says Yisroel Cimet, partner of the Cimet & Almazán law firm, specialized in civil, commercial, financial, real estate, insurance and surety law.

Read: 5 basic points for your business to survive the Covid-19 coronavirus pandemic
Even on April 27, two months after the first case of COVID-19 in Mexico, an initiative to reform the Commercial Bankruptcy Law was presented in the Senate to solve this avalanche of petitions. The idea was to design a solution that corresponded to the new needs of this complicated context, however it remained as such: in a proposal.

Among the changes that this initiative seeks, according to the Cimet & Almazán office, the following stand out:

That the use of the commercial bankruptcy process under the emergency regime will be applied from the existence of the fortuitous event or force majeure, as well as a declaration of an emergency and for as long as it exists and for the following six months.
The application may be submitted digitally and without the need for a physical file.
The merchant will not have to prove widespread breach of its obligations.
Within a period of three business days, the judge will admit outright, and without further formality, the request for commercial bankruptcy and without the need for a summons, he will issue a declaration of bankruptcy.
The unusual increase in bankruptcy applications puts on the table the need to reevaluate the way in which said federal procedure is carried out, as well as the processing times, so it is worthwhile to continue to monitor the way in which the judges They will attend to the requests that they already have on the door.

Bankruptcy is not the same as bankruptcy
According to data from the Mexican Institute of Social Security (IMSS), last May almost 10,000 companies in the formal sector had already registered their employer leave with the agency; in other words, the same number of companies went bankrupt. For this reason, it is important to note that bankruptcy and bankruptcy are not the same, since the former penalizes the lack of liquidity to comply with obligations and seeks in an orderly manner to reach an agreement between creditors and the debtor in order to organize who is owed, how much is owed and how the payment will be made, taking into account a majority of votes.

Unlike this, bankruptcy is when the commercial bankruptcy procedure is not fruitful: the parties do not reach an agreement between them and go to a stage of bankruptcy and liquidation.

In this sense, the commercial bankruptcy has as its main purpose to safeguard the source of work and economic activity, hence its importance not only as an entity that contributes to the conservation of sources of work in difficult times, but as a reactivator of the economy, necessary for the new normal.

Bankruptcy or bankruptcy What is appropriate?
Knowing if the best thing for a company is to aspire to bankruptcy or outright go bankrupt will depend on each one of them, their ability to negotiate with creditors and their financial viability; however, it is important that they know the effects and scope of each of these procedures.

“Conciliation and respect for what has been agreed is key to succeed, we must find a way to ‘not throw in the towel’ and try to save businesses, sources of employment, but also comply with those who have obligations,” he says Cimet.

The faster the problem is solved, the better the response will be, do not wait to have a truly problematic financial situation in which there is no way to pay anyone. The commercial bankruptcy does not have to be a reason for fear; on the contrary, it can be a good alternative for many companies.

Know More About PCI Compliance FAQs

Payment card industry (PCI) compliance is a set of standards that businesses must adhere to if they wish to accept credit or debit cards.
There are 12 requirements a business must follow to be considered compliant.
PCI compliance adds important safeguards and can help a business avoid expensive penalties and a loss of business resulting from a breach.

What is PCI compliance?
PCI compliance – or, more officially, Payment Card Industry Data Security Standard (PCI DSS) compliance – is adherence to a set of standards established by the Payment Card Industry Data Security Standards Council, a coalition that the major credit card companies (Visa, Mastercard, American Express and Discover) and the Japan Credit Bureau formed in 2006. Merchants must comply with these standards no matter how many credit card transactions they conduct. Those found not in compliance may be subject to hefty fines.

What data falls under PCI compliance?
The data that falls under PCI compliance encompasses what’s called “cardholder data,” which may include the following information:

Account numbers, also known as primary account numbers (PANs), which need to be encrypted
Sensitive authentication data used to authenticate cardholders
Tracked data contained in the stripe or chip
Debit card PINs
CVVs for credit and debit cards
How does taking credit cards by phone work with PCI?
For taking credit cards by phone, the following protocol should be observed:

Make sure you are using a secure network to accept PANs and other sensitive information.
Ensure your phone system is PCI compliant.
Use landlines whenever possible, as smartphones can present more security risks.
If your business records phone calls, ensure that credit card information is redacted in the recording.
Never write down the card information being relayed over the phone.
Ensure all employees are trained on your PCI compliance procedures.
What are the penalties for noncompliance with PCI?
Credit card companies can levy fees of several thousand dollars per month or more, without regard for the size of your business. These fees can be devastating for small businesses, thus making compliance essential.

You may experience nonfinancial penalties as well. For example, card issuers may choose to stop working with your business, leaving you with fewer payment options to provide customers. Or you may face a public relations nightmare as more people learn about a security breach and are nervous to give your company their sensitive information. You may also be subject to federal auditing or legal action.

Is there a PCI certification?
Your business can obtain PCI certification after a comprehensive PCI DSS audit. A qualified security assessor performs this audit, and the process can take months. While PCI certification is not required for your business to be PCI compliant, you may choose to undergo PCI certification to build trust with your customers.

The moment your customer hands over a credit or debit card, you become responsible for keeping the data associated with that card secure. While the above steps are primarily meant to prepare you for a PCI audit, they will also provide a safety net in between assessments.

Additional reporting by Stella Morrison. Some source interviews were conducted for a previous version of this article.

Learn About Bitcoin So You Can Intelligently Invest in Cryptocurrency

Explore Bitcoin and other cryptocurrencies in this one-hour primer.
Not very long ago, cryptocurrency was seen as a silly, get-rich-quick scheme manipulated by Millennials. Fast-forward to 2021, and cryptocurrency is accepted by major banks, used in legitimate business transactions, and continually defying the odds through exponential value gains. Cryptocurrency has defied expectations time and time again, and, although it hasn’t won over the financial establishment, that doesn’t mean there isn’t still opportunity in crypto for retail investors.

If you’re new to cryptocurrency, check out The Fundamentals of Blockchain, Bitcoin & Crypto. This brief, one-hour primer will catch you up to speed on cryptocurrency and the technology that makes it possible, the blockchain. The course is taught by Gabriel Avramescu (4.4/5 instructor rating), a senior information security consultant with a long history in cryptocurrency.

Here, he’ll teach you what you need to know to start investing and paying with cryptocurrencies. You’ll develop a strong understanding of blockchain technology and learn about smart contracts, decentralized, autonomous corporations, and decentralized autonomous organizations to understand the theory, purpose, and practice behind crypto. To appreciate what’s truly special about Bitcoin, specifically, you have to know how it works at a technical level, and this course aims to do just that. When you understand the technology better, it’s easier to see the sustained applicability of Bitcoin in the modern world, and you’ll be better able to separate fact from fiction when it comes to reading about Bitcoin and other cryptocurrencies.

Jump into the continuing crypto boom. Right now, The Fundamentals of Blockchain, Bitcoin & Crypto is on sale for just $24.99.

Tips for Young Entrepreneurs on the Power of Credit

Consistent on-time payments are usually more important than income.
In the United States, personal credit scores can have a massive impact on entrepreneurs and their businesses. Poor credit history can eliminate the ability to qualify for small business loans and important life decisions, like purchasing a home. For many people, navigating the world of credit can be daunting.

In recent years, it was estimated that over 26 million Americans do not have a credit score and 19 million have let their scores go stale. Unfortunately, personal finance is not something many people learn in school, but rather learn through personal journeys of trial and error. Thankfully, a new niche of savvy credit entrepreneurs has emerged on social media with a focus on educating people on the power of credit.

Related: These Credit Repair Specialists Tell 3 Steps To Repair Your Credit Score

Shawn Sharma, co-founder of Credit 101 and personal credit influencer, has dedicated the last three years of his life to helping thousands of people learn about credit, build their credit, and access the often exclusive financial services reserved for people with elite credit scores. His dedication has helped him amass nearly two million Instagram followers and, more importantly, help many aspiring entrepreneurs use credit to scale or start their businesses.

All of this was accomplished from humble rural beginnings in Alabama. Sharma learned the hard way during his time studying at Cornell that debt and credit can either be your worst enemy or one of the most powerful tools in an entrepreneur’s toolkit. Here are three tips that Sharma shared to help entrepreneurs leverage and understand the power of credit.

  1. Credit is a level playing field
    One common benefit of credit is that the current credit system is largely transparent and fair. Everyone starts from the same place and can only build their credit score by being active and responsible participants in the credit system. Think of credit as a tool and a resource that can be extremely powerful for various use cases.

“It is critical that entrepreneurs educate themselves about credit and take a responsible approach to building their profiles,” Sharma says. “The current credit system rewards reliability versus starting capital, where consistent on-time payments are more important than income. This means the average American can build stronger credit and amass more limits than a millionaire who does not make on-time payments and actively build their history.”

Most experts recommend starting with one or two credit cards that can be used to make day-to-day purchases and paid off at the end of each month. As a person’s credit history grows, their credit offers and limits will become more attractive. The most important part is becoming active in the system and having a plan to make sure credit works for you and not vice versa.

“A great way to build credit is to build relationships with local banks and business bankers, who can often go out on a limb and help in applications and underwriting,” Sharma adds. He also emphasized credit is a long-term game and those who focus on consistent progress eventually build impressive limits.

Related: Help Build Your Credit and Savings in 2021 with This App

  1. Take advantage of credit rewards
    Even if your business is successful and does not need capital, an ingenuitive benefit of credit is the rewards system. American credit cards offer the greatest cashback and largest airline mile signup bonuses of any other country. Business owners can leverage these credit card rewards and cashback opportunities to gain more revenue, subsidize business expenses and gain access to services otherwise unavailable for most people.

Sharma explains, “For example, business owners that charge expenses to credit cards can quickly gain enough rewards to pay for travel, equipment, and other services. Many credit cards offer free travel and car insurance for business owners that travel often. Even just placing normal business transactions for a business that spends $100k a year on a high-end rewards credit card can lead to $1,000 to $4,000 in cash back or airline miles often worth much more.”

New credit participants should make sure to read all of the fine print before signing up for credit cards to make sure they understand the interest rates and terms involved. Also, it is advised to spend time searching various sign up offers that typically offer enough bonus miles to use on a round-trip flight internationally. A great resource Sharma recommends for people getting started is The Points Guy.

  1. Credit can replace most traditional financing
    Entrepreneurs who have a decent credit track record can tap into various credit financing options. In many cases, using credit can help entrepreneurs remove the need of having to source external investors and offer enough runway to build and scale a profitable business. This is exactly what Sharma did starting in retail arbitrage and in his credit repair company that does over $10 million a year in sales.

“Credit can provide a bankroll for entrepreneurs to hit the ground running,” he says. “There are many options now that offer low-interest rate capital, both in the forms of credit and cash, for entrepreneurs to leverage. In some cases, we have helped entrepreneurs with strong credit gain zero percent interest loans and lines of credit. This is what I have used in the past to retain 100% equity in my companies.”

Related: When Are Personal Loans a Good Idea?

As with any financing option, credit financing can vary from provider to provider so entrepreneurs should be diligent in their research. The important thing is to look for terms that include reasonable interest rates and payback periods, as well as secondary benefits such as compounding rewards.