Bad Credit vs. No Credit

Wednesday, 29, May , 2013 by

  In a helpful article from earlier this month LowCards.com explains the difference between having bad credit and having no credit. The credit card information site asks, “Is No Credit Worse Than Bad Credit?” To answer this question, LowCards notes that bad credit and no credit are both problematic. While bad credit suggests you may have mismanaged your credit accounts, no credit shows you have not taken on the risk of credit making you an unknown quantity. LowCards explains, “The reason why having bad credit isn’t as damaging as no credit is because this situation gives lenders something to base their decision on.” It turns out people have been pondering this question for a long time. A user posted these questions to Yahoo Answers in 2007: “Is no credit worse than bad credit?” And “I dont have any credit and I am trying to get a credit card and no one will aprove me. What should I do?” Community responses to which is worse varied,

In a recent New York Times article called “The Long Shadow of Bad Credit in a Job Search” business writer Gary Rivlin follows a shoe salesman who believes his job search was hampered by a low credit score. Woven with his tale of job loss, injury without insurance and  a growing pile of rejection letters are facts about pulling credit for employment decisions. Is it legal? Should it be? And what does a credit check actually tell a potential employer? Rivlin writes, “Nearly half — 47 percent — of employers use credit checks when making a hiring decision, according to a 2012 survey by the Society for Human Resource Management. Most businesses use credit checks only to screen for certain positions, but one in eight, the survey found, does a credit check before every hire.” However, the article notes, multiple studies have shown zero correlation between credit and job performance, or even things like theft on the job. Advocates argue that credit reports don’t account

A recent Fox Business News article begins with a reader asking, “If my credit is shot, how can I apply for and get a business credit card to be able to separate it from my personal account? I have bad, bad credit. Or is there absolutely no way of doing so?” The writer, Elaine Pofeldt of creditcards.com, responds by encouraging the reader to remain hopeful. She explains, “There are a couple of credit card options for people who are trying to repair their credit.” Including a secured credit card which requires holders to make a security deposit against potential future debt. For example, you may be given a $1,000 credit limit per month but also give a $1,000 deposit when you open the card. The article also runs through options like low-limit cards. But notes that you also need to take active steps if you want to improve your credit. Pofeldt explains, “That’s just one part of improving your credit score, though. If you have outstanding credit

For the month of April The Horizon Business Funding Blog loaned its pages to taxes and other personal finance news. Today we will look back at what we’ve learned. Every year The Internal Revenue Service issues a list of a dozen dangerous tax scam — The Dirty Dozen. Shakespeare was a tax evader. An exotic dancer was able to deduct $200 of lingerie and sex toys on tax return as tools necessary for her (legal) profession. San Diego, California band ‘Bad Credit’ has music video in which the hip-hop/comedy group goofily dances in front of 1990s style graphic while wearing baseball caps and sunglasses and chanting “B-A-D C-R-E-D-I-T.” Digital tax calculators can be a helpful way to estimate your tax bill. Now stay-at-home entrepreneurs can simply multiply the square footage of the office space by $5, deducting up to $1,500. The IRS offers an easy to follow “Virtual small business tax workshop” for small business and the self-employed. Not all small businesses’ tax years look the same. Can’t pay your taxes? Don’t ignore

  According to U.S. Census data more than 16 million married Americans do not work outside their homes. Since 2009 stay at home spouses and partners have found it difficult to obtain credit. According to an article in The New York Times, This is dues to “an unintended consequence of the Credit Card Accountability Responsibility and Disclosure Act, known as the CARD Act, which became law in 2009. The law requires credit card issuers to evaluate an applicant’s ability to make payments before opening a new credit card account. Generally, under current regulations, card issuers may only consider the individual applicant’s independent income or assets.” A revision by the Consumer Financial Protection Bureau may change that. If the revision goes through adult applicants (over 21) with “reasonable expectation” of access to spouse or partner income can include that figure.

According to a post on The New York Times’ Bucks Blog,”No-Interest Card Offers Making a Comeback.” That is the title of the article which explains that credit card companies are wooing potential customer with no interest periods that stretch longer than before. The catch is to get these offers customers need high credit scores. The post quotes Odysseas Papadimitriou, chief executive of the credit card site Cardhub.com, “[Papadimitriou] says in his quarterly card report that in the aftermath of the recent recession, card companies are competing heavily for customers who have excellent credit.” Papadimitriou’s report found that, “he average zero percent introductory rate for transfers now remains in effect for more than 10 months — or about 2 percent longer than at the end of last year.” Click here for the full Times write-up. Click here for Cardhub.com’s full 2013 Credit Card Landscape Report. 

  In 2011 a study found no link between bad credit and poor job performance, according to a New York Times article from November of that year.  The research was conducted at Louisiana State University. The findings are significant because many companies conduct credit checks before hiring. The Times explains that until this study, “the validity of using an applicant’s credit history as a measure of future job performance has been largely unexamined.” In recent years credit scores have become widely used in a variety of sectors. Once a tool for lenders to compute the credit worthiness of loan applicants, credit scores are now a tool for employers, insurers and in some cases potential mates (a more recent Times article explains the place credit has come to occupy in love.) The Times writes, “Jeremy Bernerth, assistant professor at L.S.U.’s business school and a lead author of the study, said the findings shows that poor credit scores weren’t related to an employee’s propensity, say, to steal

  Did you know that only 25 percent of start-up business financing demand is filled by traditional lenders like banks and credit cards? According to a study referenced by Entrepreneur Magazine, that means that “75 percent of the money you need can come from other sources that rely less on your credit rating.” The article compares your credit score the SAT score that may have helped you get into college. “If you have a high score, you’ll have a pretty easy time getting credit offers from a wide variety of funding sources. If your score is low or nonexistent, however, you won’t.” But the article goes on to prove all is not lost for business owners in search of a bad credit loan. One important point made in the article is that banks and credit card companies once looked at the whole person. They used your character and ideas, the way a family or friend might, to help determine if you could be trusted to

When you search the term “bad credit” on Google the search engine spits back a lot of doom and gloom. Articles, blogs and even videos will claim that your life’s success and happiness rests on having a good credit score. This is simply untrue. Luckily San Diego, California band ‘Bad Credit’ is around to add some levity to the situation. In the music video above the hip-hop/comedy group goofily dances in front of 1990s style graphic while wearing baseball caps and sunglasses and chanting “B-A-D C-R-E-D-I-T.” Like ‘Bad Credit’ The Horizon Business Funding Blog will provide some perspective on the credit question. In addition to our monthly theme we will occasionally explores news impacting businesses with bad credit and bad credit business lending. Stay tuned, and definite watch “B-A-D C-R-E-D-I-T.”

  Since mid-January, cities around the country have been celebrating “Restaurant Week.” New York City— where foods tends to dominate talk anyway — has been buzzing over where to go for the three-course $38 dinner or $25 lunch deals (prices vary from metropolitan area to metropolitan area). While the last of the restaurant weeks wrap up in the next few days, that doesn’t mean we need to stop talking about food, how people are making money  at it and the advances the industry is making. Check out a few fun facts to get our conversation going: In 2007 there were 220,089 full-service restaurants in the United States which brought in $192 billion according to the U.S. Census Bureau, this data is collected every five years so expect updated figures soon. That year the industry employed 4.6 million people and paid them $63 billion, also according to the Census Bureau Franchise sales complete 19% of restaurant industry sales that year The National Restaurant Association expects combined

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