As you prepare for practice, you may hear people say, “You can’t go into practice for yourself because you will never get a bank to loan you money.” For many students, this is a formidable psychological barrier. But before you despair, remember that chiropractic graduates obtain business loans every day.

Certainly, you can take some actions to improve your chances of obtaining a loan for your business when you graduate. One of the most important is to check your credit rating and repair any errors or old negatives.

“Why do this now?” you may ask, “I have plenty of time before I graduate.”

The reason: It takes considerable time — months, in most cases — to obtain a credit report, gather documentation, write letters, and see the results.

Start this process before you meet with your first banker. You don’t want any surprises or delays at that point.

When you apply for a loan, the first thing the banker will probably do is pull a credit report on you. In addition to reviewing the business plan for the practice, the banker wants to find out whether you have a good financial “track record.”

Are you a good credit risk — the kind of person who is conscientious about repaying bills?

The credit report tells the banker a lot about you as a financial person. The credit score is called a FICO score – the higher the score, the better your credit rating.

Some factors that affect your credit score include:

• Your payment history, including late payments and delinquencies;
• How much you owe on credit cards;
• How long you have had your credit cards;
• How many recent new accounts you have opened and how many inquiries for new accounts have been made.

Note: It is true that having many inquiries on your credit account can be a negative factor, but different types of inquiries are counted differently. Inquiring on your own credit history does not count against you.

To check your credit rating and obtain your FICO score, go to annualcreditreport.com and request a free credit report. (You can do this one time every 12 months from each of the nationwide consumer credit reporting companies: Equifax, Experian, and TransUnion.)

You will have to pay extra for the FICO score, but the cost is worthwhile to get the information.

You can also estimate your FICO score at Bankrate.com, (www.bankrate.com/brm/fico/calc.asp) )by answering a few questions.

When you get your credit report, look it over carefully. If you are overwhelmed and confused by the information you see, go to Bankrate.com’s “News and Advice” section and read “How to read and understand your credit report” under “A Guide to Managing Your Credit.”

When you read your credit report, pay particular attention to items you feel are in error and negatives which are old (older than five years or so). Then start working to get the errors corrected and the old negatives off.

Here’s how:

1. Write to the company. Respectfully describe the error, including as much detail and documentation as possible, and end by stating exactly what you want the company to do.

2. Repeat as necessary. You might have to follow up several times, with letters and phone calls, since most companies are not eager to do this work.

3. Document your efforts and the responses. Notify all three credit reporting agencies when you have completed your work.

4. Finally, obtain another credit report. Check to see if the errors have been corrected. (Repeat as necessary.)

You can see why it’s good to get started on this process while you’re a student, so when it comes time to go to the bank for your business loan, your credit will be as good as possible.

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