1 The content herein is for illustrative purposes only, are for your discussion or review purposes only, and should not be used to make your financial decisions. Bank of America makes no express or implied warranties with respect to any aspect of the content herein, nor does it guaranty any success or promise any results or success, and hereby disclaims the same to the extent allowed by law. You are not bound by any recommendations provided herein and retain full responsibility for the results achieved by your professional practice. Please consult your financial, legal and accounting advisors, as neither Bank of America, nor its affiliates or employees provide legal, accounting or tax advice. Bank of America Practice Solutions is a division of Bank of America, N.A. Bank of America and the Bank of America logo are registered trademarks of Bank of America Corporation. ©2024 Bank of America Corporation. MAP 6515642, 03/2024 Ray Berk Vice President, Regional Business Development Officer 941.330.7145 | raymond.berk@bofa.com Let’s talk Know your credit score In today’s world, access to your FICO credit score is widely available to you, but do you know what it means? In general, a credit score above 700 is considered to be a “good” score, while scores in the upper 700’s-800+ are considered to be “excellent”. If your score dips lower than 700, it could be due to slow payment of debt obligations, an increase in debt (think credit card balances), or perhaps you have applied for credit several times in a short span of time. Monitoring your score, paying your obligations on time, managing your revolving debt, and only applying for credit when you have a significant need are great ways to ensure the score you have is “good” or better. The bottom line Spend some time to prepare yourself financially, so when you do sit down to discuss financing your ownership or expansion opportunity, you’ll be yourself more bankable and in turn, have more choices in the lending you can receive. Establish and maintain a rainy day fund Whether you are an associate or an owner, banks like to see that you have some personal liquidity to weather any financial headwinds you may experience. For example, well-capitalized owners and associates have historically demonstrated they have the ability to “weather the storm” of slower months, illness, and even pandemics, without having to dip into credit cards or lines of credit. They were able to come out the other end with comparatively less or little debt. Establishing personal savings helps demonstrate to a lender that you are a sound financial risk with a back-stop of savings to help with a financial challenge—personal or economic. Pay down (the right) debt Many associates come out of dental school with several hundred thousand dollars of student loan debt. It is not uncommon for associates to focus on paying that debt down faster with any extra income they have. After all, it’s a large amount of debt, and let’s be honest, it’s scary! We would caution you to think about debt a little differently and focus on several other areas before tackling those student loans. The same goes for current owners; tackling debt the right way makes you a better risk to lenders and more “bankable.” 1. Pay off your credit card debt If you have credit card debt, pay it down first and as quickly as possible. This debt usually carries the highest interest rates and has the greatest effect on your credit score. 2. Establish that rainy day fund As discussed earlier, don’t pay down your debt without first establishing your rainy day fund. Or do both at the same time. 3. Tackle highest-rate debt first If you have done the above, then it may make sense to pay down your student loans. A good idea would be to tackle the loans with the highest rates first, since they’re costing you the most money. Know your credit score In today’s world, access to your FICO credit score is widely available to you, but do you know what it means? In general, a credit score above 700 is considered to be a “good” score, while scores in the upper 700’s-800+ are considered to be “excellent”. If your score dips lower than 700, it could be due to slow payment of debt obligations, an increase in debt (think credit card balances), or perhaps you have applied for credit several times in a short span of time. Monitoring your score, paying your obligations on time, managing your revolving debt, and only applying for credit when you have a significant need are great ways to ensure the score you have is “good” or better. The bottom line Spend some time to prepare yourself financially, so when you do sit down to discuss financing your ownership or expansion opportunity, you’ll be yourself more bankable and in turn, have more choices in the lending you can receive. | 43 Nov 2024
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