Panel of experts focuses on personal and business credit in conjunction with MED Week

ABOVE PHOTO: Courtesy of PIDC

By Constance Garcia-Barrio

The 39th Annual Philadelphia Minority Enterprise Development (MED) Week took place last week from October 2 to October 6.  This annual event helps minority business owners forge connections and gain access to resources that could spur their growth.

MED Week, which is a national event, also showcases the achievements of minority businesses while honoring the corporations and financial institutions that support them.

Last week’s gathering included a panel called “Credit Dynamics: The Relationship between Personal and Business Credit Growth.” The Philadelphia Industrial Development Corporation (PIDC) sponsored the workshop.

“As the city’s economic development corporation, PIDC’s mission is to spur investment, support business growth, and foster developments that create jobs, revitalize neighborhoods, and drive growth to every corner of our great city,” said Jodie Harris, president of PIDC. “We’re proud to support Minority Enterprise Development Week in Philadelphia by offering a workshop — available in English and Spanish — detailing strategies on how business owners and entrepreneurs can enhance their credit backgrounds to gain the most advantageous business loans and financing possible. Access to — and proper managing of — credit is critical to business growth and the connection between personal and business credit is essential to success.” 

Panelists included Kersy Azocar, president and CEO of Greenline Access Capital, a nonprofit financial organization serving Philadelphia and founded in 2021; Marla S. Hamilton, senior vice-president and director of client engagement and business support with the Philadelphia Industrial Development Corporation (PIDC), which offers financial and real estate products for businesses, nonprofits, and developers, and Gabriela Santoferraro, a vice president at TD Bank who specializes in loans to small businesses.

“When I discuss businesses loans, credit is always part of my conversation,” Santoferraro said.

The PIDC workshop sought to sharpen minority businesses owners’ awareness of how one’s personal credit score can affect lenders’ decision on a loan application.

If you’ve just established your business, banks have no basis to size you up as a borrower, so they turn to your personal credit to help assess the risk they would take in making a loan, according to Santoferraro.    

The panelists spoke about the three main credit bureaus: Transunion, Experian, and Equifax. Prospective entrepreneurs and the general public can obtain their credit records by Googling  https://www.annualcreditreport.com/index.action or by calling 877-322-8228 for an Annual Credit Report Request Form. Once the form is completed, it can be mailed to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5201.

The panel stressed the importance of ordering  a credit report from each of the agencies, because their data may differ.  

Make sure that all three credit bureaus have accurate information, the panelists stressed. Santoferraro spoke of a case in which a man seeking a loan was listed as having an open collection or debt, according to one credit agency. However, he said that he had paid the collection in 2021, yet it was still on his record. He had to dispute the information to clear his record. In some cases, the credit bureau makes an error, but in others the individual makes a mistake. In either case, it’s crucial to address discrepancies, the panel said.

Most lenders use the FICO (Fair, Isaac and Company) method of calculating credit scores, based on information collected by credit agencies. Developed by Earl Isaac and William “Bill” Fair in 1956, the two friends and business partners believed that data used wisely leads to better business decisions. The FICO approach is now utilized worldwide. 

FICO scores range from 800, an exceptional rating, to 300, considered an extremely poor risk. The rating affects how much interest you will pay. The higher your score, the lower the interest you pay. 

In other words, lower payments means that the loan costs you less. The difference can amount to thousands of dollars over the life of the loan, panelists said.

“The funds that you keep can help build generational wealth,” Kersy said. “That money can help break the generational cycle of poverty.”

The panel offered tips to cultivate good credit habits:

1. Just as you do your taxes once a year, check your credit report once a year.

2. Always, always, pay your bills on time.

3. Maintain a low balance on your credit card. The panel recommended a balance of no more than 30 percent of the maximum allowed. If your credit limit is $10,000, a balance of no more than $3,000 is ideal.

4. Check the PIDC YouTube channel for presentations on more business topics: https://www.youtube.com/@PIDCPhila. 

5. Other business support resources available at  PIDCphila.com. 

“If you are looking for resources to grow your business or organization, PIDC is Philadelphia’s public-private economic development corporation,” Harris said. “It provides  Business Builder Workshops to established businesses, nonprofits, and developers across the city. Contact us at (215) 496-8020 or fill out our inquiry form to find out how PIDC can support your growth.