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Now's The Time For Startups And Homebuying

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The Tampa Tribune

Published: March 1, 2009

My e-mail inbox is full again, which signals to me that it's time to do another round of questions and answers. Below are a couple queries that I know are on the minds of more than a few people.

Eliza from Lincoln, Neb., writes: I'm a 34-year-old woman with a great idea for a startup. I've written a solid business plan, I have a great marketing strategy and I am emotionally and physically prepared for the challenge. But given the economy, how do I know if now is the time to proceed with my idea?

Eliza, now is a great time to launch a business if you have the financial and emotional wherewithal. Often, the best ideas come out of necessity - for example, if someone was laid off, needed to bring in some money, and finally took the plunge with that invention or business idea that's been brewing for a few years. Add that to the fact that there is less competition out there right now because many businesses are folding - and that businesses need to outsource the work of departments they have eliminated - and you certainly have a good climate for a startup.

However, be sure to do it in a way that is financially savvy. Research the industry that you are in to see if the need is there. Talk to others in the industry, and look at reference sources such as the Bureau of Labor Statistics. You say you're afraid to wait; I'm afraid that if you jump too quickly, you won't have all your ducks in a row. So make a plan, then back it up with six to 12 months of expenses you can live on while your business takes off. Or even better, moonlight a bit before you quit your day job so you can start your business on the side and slowly work your way to full time. You'll have a safety net in case things go sour.

Sarah in Tampa asks: My boyfriend and I are planning to get engaged this year, and we're looking forward to buying a home in the next couple of years. My credit score is great and I already own my home. His credit score is not good and he has a considerable amount of personal and business debt. What happens to your individual credit scores when you get married? And how will that affect our ability to buy a new home together in the future?

A lot of things change when you tie the knot, but your credit score isn't one of them. Your individual scores will stay the same, and getting married will neither hurt your score nor help his. But here's the deal when it comes to buying a house: If you want to purchase the home together, a mortgage lender is going to pull both of your credit scores from all three credit bureaus and base the level of risk they are taking on the borrower with the lowest score; in this case, your boyfriend. That means higher interest rates. If, on the other hand, your income and credit are sufficient to get the loan on your own - and it sounds like they might be based on the fact that you already own your own home - you can have the lender factor only your income and credit into the application, which will likely result in more favorable interest rates.

My advice? Shop around. Contact a variety of lenders and see where you can get the best deal. Generally, having a lot of inquiries from lenders will drag your score down, but if you do all of your shopping within a 30-day period, it will show up as only one inquiry and result in minimal damage.

One last thing to note: If you wanted to help raise his credit score, you could add him as an authorized user on a credit card of your own that is in good standing and is more than five years old, says Craig Watts, a spokesman for Fair Isaac, a company that calculates credit scores. That card will then appear on your boyfriend's score report, along with its positive history, and by extension, will improve his score. How much it improves also depends on what else is dragging it down, but this method certainly can't hurt.

Jean Chatzky is the financial editor for NBC's "Today," a contributing editor for More magazine, and a contributor to "The Oprah Winfrey Show."

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