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Ensuring a Healthy Credit Profile in Ten Easy Steps

by Greg Owens | 02/07/2013 | Financing & Financial Planning , Physicians

Well before you meet with your broker or contractor to purchase or start a medical practice, investigate the condition of your credit profile. Your credit report will have a significant impact on your ability to obtain practice financing with the best possible interest rates.

How Credit Decisions are Made
Good credit is the basis for all your financial investments, whether you?re building your first medical practice, or buying your first home. While lenders consider a number of factors when making a credit decision, the most critical aspects of your financial profile are your personal debt ? including student loans and lines of credit ? and your overall credit rating based on amount of debt and timeliness of monthly payments.

Credit decisions for practice acquisition loans are typically based on an assessment of practice cash flow and your ability to repay the loan while covering your expenses and lifestyle. Credit decisions for practice start-up loans are mostly based on your debt-to-asset ratio. The amount of your personal debt factors directly into both equations. Generally, a low level of debt yields a higher credit limit decision, meaning the lender is authorized to release more funds to you, while high personal debt results in a lower credit limit determination.

Following are 10 simple steps you can take to improve your credit rating and ensure a healthy financial profile:

Maintain at least two or three revolving credit accounts such as credit cards and lines of credit. This shows you are credit worthy and able to manage debt. Avoid applying for credit from too many lenders.  Multiple credit inquiries within a short timeframe can negatively impact your credit rating. Demonstrate that you know how to use your credit wisely by not using all the credit available to you. Make on-time monthly payments on credit cards, mortgages, installment loans and student loans.  Remember, many service providers do report late payments and collections to credit bureaus. Consolidate your personal loans in order to improve cash flow and generate a better financial profile. If you are in dispute with a creditor, continue to make minimum monthly payments while working towards a resolution. Notify creditors in writing of your address change. Avoid co-signing or guarantying a loan for a friend or family member, as it has the same impact on your credit as being the primary borrower. Protect your identity. Review your personal credit report at least twice a year to ensure accurate reporting of all accounts.  Inform all credit bureaus in writing of any discrepancies. Keep copies of all agreements, documents clearing judgments or liens, and letters from creditors clearing discrepancies in your loan history. Remember, all credit information stays on your records for up to ten years.

Having good, well-managed credit will help you secure the financing you need to purchase or build the practice you truly want. It?s never too soon to get started on developing a healthy financial profile.

Greg Owens
Greg is a seasoned banker with more than 16 years of experience in commercial banking. With a Bachelors degree in Finance and a Masters in Accounting, Greg's entire career has been in the financial services industry. He joined Wachovia Bank (purchased by Wells Fargo in 2007) as a Commercial Relationship Manager in 2003 and transitioned to Wells Fargo Practice Finance as a Regional Business Development Manager for the Mid-Atlantic region in 2011. He can be reached at 1-800-407-4737 or greg.owens@wellsfargo.com.

All practice financing is subject to credit approval. Business Refinance Program is for business term debt only. Revolving credit and existing Wells Fargo Practice Finance debt are not eligible for consolidation.

The articles and materials on the Wells Fargo Practice Finance Web site are provided for general information only and do not constitute, nor are they intended as, a substitute for consultation with accounting, tax, legal or other professional advisors. Wells Fargo makes no representation regarding the articles available in the Strategies for Success Library or the completeness or accuracy of the information contained therein. The articles and the information contained therein may be incomplete, may contain errors or may have become out of date. Wells Fargo makes no commitment, and disclaims any duty, to update any of the articles or materials in the Strategies for Success Library. The views expressed in the articles are those of the authors alone. They may or may not reflect the views or opinions of Wells Fargo.

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