Our divided government has not agreed about avoiding the fiscal cliff, regardless if there is an agreement, statistics show an inevitable recession, inflation accelerating, more tax increases on small businesses and for incomes of $250,000 and over. Let’s not forget about the 3 -5 year old shadow foreclosure inventory that banks have retained in their portfolio, it has to go out somewhere, right? Or how about 46 million Americans on food stamps and counting, these are factors of an upcoming recession, a weaker economy and a credit downgrade. The statistics and factors we provided will cause a chilling effect on your credit, here are just a few topics:
1. Credit Applications: If you’re applying for a business loan or mortgage in 2013, expect more credit crunches and extra underwriting conditions. Most of the general public doesn’t understand the logistics of the Dodd Frank Act; actually, it hurts the economy and you than helping the economy and you. The Dodd Frank Act will be in full effect in 2013, which will cause a series of credit crunches for mortgage applications. Did our country need mortgage reform? Yes, indeed, however, the Dodd Frank Act also needs reform.
2. Higher Closing Costs for Business Loans and Home Loans: More government intervention equals more expenses to lending institutions, which causes a domino effect of expenses back to you. Example: If a lending institution expenses more to comply with more government regulations, then your closing costs will cost more. More expenses equal more fees, more spending equals’ inflation, it’s simple math.
3. Credit Restrictions across the Sphere: If you’re repeatedly late on a credit card or line of credit, your other creditors may reduce your other credit lines. Banks can no longer afford default, that’s why most banks have a proactive outreach to their borrowers. Business credit is tightening up as well, it’s important to maintain your business credit in good standing too. Even if we do offer alternative business financing, expect more credit restrictions for your small business loan application.
4. More Debt More Problems: The national debt is out of control, in fact, Obama wants to enforce an unlimited debt ceiling, spending as much as the government wants to without limitations, which you will be paying for. More debt weakens our U.S dollar and your credit. It’s like going shopping to Neiman Marcus and Saks without any credit limits or restrictions, and then Neiman Marcus and Saks would be out the gross revenues, in turn pay for their losses and without replenishing inventory.
Even if we do enter another recession, keep your finances in tip-top shape, and maintain your credit and debt in good standing.