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April 10, 2010

Capital One the latest to report business debt to personal credit bureaus

Capital One goes to the dark side.

Some people dread going to the dentist.  Others dread speaking in public. I dread getting my credit report. 

This fear exists not because I have bad credit, but because I know that as a business owner, I am vulnerable to the reprisals of credit card companies which, in response to the passage of the Credit CARD Act, have begun to take out their frustrations on small businesses.  Because credit cards issued to businesses are not covered under the new act, business owners are sitting ducks.

I checked my credit report a few days ago.  Everything was prefect except one thing:  One of my business creditors, Capital One, began reporting my business credit to all three personal credit bureaus in October 2009.  In other words, no longer are my personal debt and business debt separate.  My worst nightmare came true.

I completely missed this policy change. As far as I know—and I make sure I read any correspondence from credit card companies—no notice was sent out about this change. The credit card companies are up to their same dirty tricks. Just when you think you have outsmarted them, they do something new to make life unnecessarily difficult.  

As a result of this new account showing up on my reports, my credit scores dropped almost 100 points each. Yes. I said 100 points.  They have never been this low! Never.  

Normally, I do not carry a balance on the card, but I recently started to carry a higher balance to better manage my cash flow. My limit is low, just over $3,000.  My balance, $2,000 and change, was too much, increasing my debt-to-available-income ratio to stratospheric levels. Business is going well, actually, and I decided to make some capital investments. You would think this is a good thing. Well, if you are a customer of Capital One, proceed with caution. A smart move to leverage up like this in business will negatively affect your personal finances.    

I was livid to say the least, especially since there was no heads up, and my credit history with the company is pristine.  Perhaps I was still drunk from celebrating the passage of the Credit CARD Act and forgot that credit cards for businesses are not protected. 

After calming down a few days later, I came to the following conclusion: Stop doing business with Capital One and tell everyone I know how terrible the company is. It is that simple. In fact, after my three-day conniption, I realized that once I pay the card off this month, it will actually help my credit score.  So, there is a bright side to this story after all. 

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Comments

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I was wondering why I was seeing Capital One on my personal credit history. This trend is absolutely crazy! Banks aren't lending to small biz, and credit cards used to be a short-term solution to let a small business do some small asset upgrades (i.e. new computer hardware, software, etc). This only hurts small business owners if they can't even carry a balance without affecting their own personal credit scores. It's affecting my ability to qualify for a relatively small mortgage on a condo!

I hope to never get in debt again. But of course my plans were to be out of debt years ago economy put it off.

Today I mentioned this story in a meeting of business owners and entrepreneurs. I wanted to warn them. It reminded me that I have an update.

I paid the balance in full a few days after writing this entry, and I no longer carry a balance. I'll let you know if my score went back up 100 points. For some reason, I doubt it. We'll see.

I hadnt been to the site for awhile and see that Cap One is following Chases example. I am so sorry for everyone who has a business account that this is happening to. I still claim it is a violation of truth in lending laws. and if not now, for the entire period they didnt report the debt. One ruling somewhere on this could start a landslide. There are a lot of attorneys who are having this happen to them now also, so it will happen. And when it does--you will have the news on here posted for everyone to follow suit.

That's the idea, Jeffrey. I cannot wait until I am debt free too. Maybe we can call Dave Ramsey together and scream, "I'm debt free!"

By summer I should be out of debt. I hope to never get in debt again. But of course my plans were to be out of debt years ago economy put it off. But I can see light at end of tunnel. I not used credit in years and I missed out on some things due to it. Seeing all businesses going out of business due to not able to pay debts I thank made right call. My credit score been going up since started paying off debts. I can not wait until it becomes 0. I do not want a I love debt score.

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About Me

Greetings! I’m Kevin D. Johnson, a business owner who has recently assumed the role of consumer advocate and internet activist. Atlanta, Georgia is my home.

My Story

Upon returning from my wonderful honeymoon in Jamaica in October 2008, I received what I thought was an ordinary American Express bill, but to my surprise it was a disappointing letter informing me that my credit line was reduced by about 65% for a highly suspicious and discriminatory reason. Considering my excellent credit score and pristine payment history, it just didn’t make sense. However, what does make sense are the unfair and insidious policies that I have uncovered when asking why. It is time to change them.

Good Morning America tells my story.

The Goal

I created this web site to document and share my challenging journey to change what is wrong, unfair, and unjust in the credit card industry. The ultimate goal of this web site is to inform consumers of ways to stand up for themselves against treacherous business practices and to educate consumers about how to improve their credit. Finally, I hope to encourage a more open dialogue with credit card companies about their policies–good and bad.

Success

I am proud to say that this blog's unyielding demand for change led to an important amendment in the final Credit CARD Act signed by President Obama on May 22, 2009. Despite this major accomplishment, there is still more work to be done.

View video of bill hearing in Maryland

Testifying at a bill hearing in Annapolis, Maryland

Speaking Engagements

In an effort to educate as many people as possible about financial management, especially about how to manage the current credit crisis, I have begun to speak around the country at colleges, universities, corporations, chamber of commerce meetings, congressional hearings, trade organization meetings, etc. Having acquired a wealth of information that will help to empower people and to improve their financial future, I feel that sharing this information is the least I can do to make a positive impact. For information on my availability for speaking opportunities, please send an e-mail to Jennifer Silverman at jennifer@silvermanworldwide.com.


Speaking at a university

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