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Your Credit Rating and Your Practice
By Deborah Held Maslia
Tell the truth: Have you checked your credit report lately? How about your credit score? Well, you should get a hold of both—yearly, at the very least.
With the amendment to the 2003 Federal Fair and Accurate Credit Transactions Act (FACT), as of Oct. 13, 2006, you are entitled to obtain a free credit report from each of the nation’s three consumer reporting companies—Equifax, Experian and TransUnion—at your request, once every 12 months.
Active participation with both your credit report and credit score can spell the difference between success and failure for a chiropractor’s business and home life, especially when first starting a practice, says Kirk Kinder, founder and president of Picket Fence Financial in Bel Air, Md. and a National Association of Personal Financial Advisors (NAPFA) registered advisor, who has worked with many DCs.
And it’s simple to do. Equifax, Experian and TransUnion have set up a central website authorized by the Federal Trade Commission (FTC) at annualcreditreport.com. A trip to this secure website will yield you a copy of your credit report from each of the three bureaus, all at the same time for easy comparison of your credit activity.
Or, if you prefer, you can spread out your free credit reports, spacing them throughout the year by going directly to each reporting company individually, allowing you to stay on top of any suspicious activity that might go on during the 12-month period. This method allows for timely maneuvering on your part in the event of fraudulent activity or human error.
Ranging in number between 400 and the more than 800 points, the higher your score, the better your credit risk appears to lenders.
Experts agree that a credit score of more than 800 points is outstanding, and some say that any score below 600 points is low.
While at times confounding, experts agree that credit scores and credit reports are an essential part of your life and potential lifestyle.
Combined, your report and score paint a financial picture of you as a “risk” to the lender in question. The more promising the risk you present, the better the loan(s) you will be able to receive.
“Keeping the cost of interest rates as low as possible is critical,” says Kinder. “If a chiropractor has a poor credit score, he could see precious capital going to interest rates and not to advertising, equipment, living expenses, etc.”
A high credit score can save a chiropractor “thousands of dollars in interest” when leasing or financing office equipment, says Cary Carbonaro, a NAPFA registered financial planner and president of Family Financial Research, a fee-only financial planning firm headquartered in Seaford, N.Y. with offices in Florida and New Mexico. Carbonaro says that good credit is especially significant when obtaining a loan for office space, due to the sizable pricing involved in a commercial real estate transaction.
“Your credit score is everything,” says Carbonaro. “There’s nothing it doesn’t affect—from your personal life to your professional life. It says that you are a good credit risk and that you will pay your bills.”
Still, only 15 percent of Americans are checking their credit reports each year, says Howard, who urges all citizens to take advantage of the new legislation.
While the new legislation presents a great opportunity to stay on top of your credit information, this act has opened a Pandora’s Box for scammers either looking to sell their reporting services for a hidden fee and thieves looking to make off with your credit identity. Carbonaro says that, in her experience, chiropractors are a notable target for financial scammers and schemers, as DCs are known to be financially successful.
This makes staying educated about your credit report that much more important, both Kinder and Carbonaro advise their clients.
Be especially careful when typing out the name “annualcreditreport.com” as well as those of Equifax, Experian and TransUnion. For added safety, you may link directly from the FTC’s own site (ftc.gov) in order to avoid being directed to imposter websites. Additionally, watch out for sites that have a name that is close in title or spelling to any of the “safe” consumer credit reporting companies.
And be advised that a legitimate credit bureau will never solicit you—especially by email—to obtain a free credit report, according to the FTC’s website.
You may want to be on top of your credit situation on a more regular basis, but you’ll have to pay a fee for this convenience. Just as with free credit reports, here again, buyer beware, warn the experts.
There is no way to erase a poor credit history or ranking, bankruptcies and late pays, and companies or clinics that promise to do such are to be avoided, advise the FTC and Howard, as you can take charge of the situation on your own at little to no cost.
Whether you’re trying to rebuild a low credit score or to maintain the one you’ve got, always pay your bills in a timely manner, agree the experts, as this is the number one way to increase your credit score and to build a positive credit history.
And of course, collect a free copy of your credit report and credit score at least once a year in order to watch for fraudulent activity or plain old reporting errors. Make sure to issue a “fraud alert” and to report errors to Equifax, Experian and TransUnion individually in the event that such activity has occurred, says Howard’s own website, as the three institutions do not share information.
Protect Your Credit Score
The Federal Trade Commission estimates that as many as 9 million Americans have their identities stolen each year. It’s their No. 1 complaint! Consumer advocate Clark Howard offers these tips to protect your identity and your credit score:
1. Buy a paper shredder. It’s a small investment to keep your identity safe. Shred any documents listing your social security number, bank account number and credit card numbers.
2. Pay by cash or credit card, not by check.
3. Keep your Social Security card in a safe place at home.
4. Do not use your Social Security number as your driver’s license number.
If your identity is stolen, Howard advises to get a police report from your local police department, ask each of the three credit bureaus to place a fraud alert on your credit report, and fill out affidavits of fraud with each company that issued credit in your name.
Helpful Resources
Equifax: (800) 525-6285; equifax.com
Experian: (888) 397-3742; experian.com
Transunion: (800) 680-7289; transunion.com
Social Security Administration Fraud Hotline: (800) 269-0271; ssa.gov/oig/guidelin.htm
Federal Trade Commission: (888) FTC-HELP; ftc.gov
Clark Howard: clarkhoward.com
©2006 Today's Chiropractic