11. Corporate credit cards, co-signatures, divorce – how do these things affect credit?

The second variety of corporate credit card is the small business one, where typically you the business owner personally guarantees the lender.  Thus while most lenders who put out corporate credit cards will not report this card on the personal credit report of the business lender, they may report it to Dun and Bradstreet and it will probably show up on the corporate credit report.  In the event the small business does not pay and the line is delinquent, then the lender will report the delinquencies to the personal credit bureau of the small business owner as well – unfortunately in the small business world, all corporate lines of credit are personally guaranteed.  Thus in the event of a corporate bankruptcy the business owner generally has to file personal bankruptcy as well.

Co-Signer:
There is one simple answer that you should give anybody who wants you to co-sign for them on any loan – no thanks!  It has been our experience that even with the best of intentions this is a bad idea and one of the most sensitive issues in the world of small businesses is when one or more partners requires you to sign for a personal credit card or loan and then defaults on it!  Co-signing is also very frequent within families, and between friends and under any circumstances we recommend that you DO NOT co-sign on any loan.  Nowadays even if you get a spare credit card from a family member chances are that is being reported on your personal credit report even though your name was never there on the application and you did not co-sign the card!

Divorce:
One of the most common issues facing spouses who are divorcing is how to go about separating the items on their personal credit reports.  The most difficult to disentangle is of course the mortgage.  The only way for you to get your name out of an existing mortgage note is to have your ex-spouse refinance in their name without you being on the new note.  This of course is not always possible since your ex-spouse may not be able to qualify for a mortgage under their own name and you may be stuck with the note even though you don’t live in the house!  We recommend that you consult a good divorce attorney!

12. What does the average personal credit report look like?

While each lender has their own way of grading you and each repository has their own algorithm that measures you credit versus the rest of the population, it is important to note what the profile of the average American is like to gauge for yourself where you ought to be:

• On average the consumer today has about 10 to 11 obligations on their personal credit report.
• About 40% of all borrowers out there have a 30 day late payment on their bureau, and another 20% have a 60 day late payment and another 15% have a 90 day late payment.
• Only about one in ten borrowers out there have had a loan or account closed on them by a lender.
• In terms of balance, about half the borrowers out there have a balances of less than $1000 and nearly one third of the borrowers out there carry more than $10,000 of debt that is not mortgage related.
• The history of the average consumer is 12 to 13 years old and the typical borrower out there has only had one or two inquiries against their credit recently.