Strategies for Life: July 2006

Sunday, July 30, 2006

Mirco loans at Kiva.org

Micro loans for your business check out Kiva.org

A popular question from my readers is where to find obtain a loan for a small business. The funny thing is the logical answer would be to check with your bank, however, banks don't like risk and loaning money to small businesses is risky. I recently read an article about a website cal Kiva.org. Kiva provides small business wannabees with an avenue to find loans from not traditional loan sources which generally means private individuals.

How does Kiva work: Basically, the prospective small business post want ads indicating the type of business loan that they need and a description of their business. Generally the small business owners is planning to repay the loan through profits generated by the business. The repayment time frame is usually 9 to 16 months.

How is Kiva different then Prosper.com: Kiva focuses on letting you loan to the working poor around the world. By specializing in loaning money to unique small businesses in the developing world you can "sponsor a business" and help the world's working poor make great strides towards economic independence. On the otherhand Prosper basically anyone around the world can request a loan for almost any situation. Basically, you are loan the money as a good will gesture. You are giving something back to the world community and helping the less fortunate.

Kiva has only been open for business for 5 months, however it has already fund 450 small business with over $200,000 in loans. The cool part is that all of the repayment transactions are handled automatically by Paypal.com.

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Saturday, July 22, 2006

What is a FICO score

What is a FICO score?

Thinking about buying a house, leasing a car, or taking on some other type of debt? When you apply for a loan, a credit card, car loan, or mortgage, the banks or lenders want to know what risk they'd take by loaning money to you. Higher FICO scores means you have good credit, lower scores may mean you have poor credit and are a higher risk. Are you looking for ways to Raise your FICO Score.

FICO® scores are the credit scores most lenders use to determine your credit risk. You have three FICO scores, one for each of the three credit bureaus: Experian, TransUnion, and Equifax. Each score is based on information the credit bureau keeps on file about you. As this information changes, your credit scores tend to change as well. Your 3 FICO scores affect both how much and what loan terms (interest rate, etc.) lenders will offer you at any given time. Taking steps to improve your FICO scores can help you qualify for better rates from lenders.

FICO scores are designed to measure the risk of default, by taking into account various factors. Although the exact formula for calculating the FICO score is a closely guarded secret, the following components and the approximate weighted contribution of each:

35% punctuality of payment in the past
30% capacity used: the ratio of current revolving debt (credit card balances, etc.) to total available revolving credit (credit limits)
15% length of credit history
10% types of credit used (installment, revolving, consumer finance)
10% recent search for credit and/or amount of credit obtained recently

If you would like to get an estimate of your FICO score you can to the FICO Esitmate calculator at Bankrate.com.

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Monday, July 10, 2006

Get your free credit report

How to get a free credit report

Probably the most advertised free credit report service is http://www.freecreditreport.com. However, I tried the site and I couldn't figure out a way to actually get a free credit report. The other day I was driving home from work and I heard a news story about actually getting a free annual credit report. This one actually works and you do not have to put in a credit card. Unfortunately, you do need to put in a social security number but I guess that makes sense.

The site is called https://www.annualcreditreport.com/cra/index.jsp it provides a yearly free credit report from Equifax, Experian, and TransUnion, in order to monitor credit history and guard against identity theft. I tried the service and it works. It is amazing how many different credit cards and lines of credit at different stores you accumulate over the years. It is probably a good idea to go through the list of lines of credit and credit cards and cancel them. Some of them I didn't even remember opening.

Anyway it is a good way to get your free credit report on line. You don't have to pay for it. Of course they have all kinds of options that you can buy like subscribing to a service that informs you if your credit score has changed additionally in order for you to get your FICO score they also want to charge you something like $6.95. Not sure why they do that.

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