Character is one of the 5 C's of credit. The others are Capacity, Collateral, Conditions and Capital.
Character is usually assessed from a lengthy track record of successes and failures. Often family or friends are used to predict potential character. What happens when you don't have these going for you?
One method to register your character profile with a lender, long before you intend to apply for some business credit, is to visit the lender to discuss and ask for advice about future plans you are developing. Make it clear that you are not presenting a request for a loan at this time. State that you would return with a formal business plan when you are ready to proceed with an application. Make similar visits as your planning progresses. Combine with the next method if feasible.
Another method is to borrow a small amount on a personal loan that is well within your capacity to repay. Successively, borrow and repay with increased amounts each time. You can even use some or all of the proceeds of the loan to make the repayments. Be careful with the latter as it is sometimes used by fraud artists to build up credit before skipping town with the "BIG one."
In addition, your long-term plan includes qualifying the lender. There are a few conditions to consider.
When I was a lowly bank junior, a visiting inspector tried to coerce me into applying bank postage to his personal mail. The seniors appeared uncomfortable with his persistent trickery. The inspector was standing at the top of a stair when I brushed by. He lost his balance and tumbled down the stair. We all held our breaths until he emerged with nothing but a very red face. I was assured his tactics were definitely out-of-line.
Years later I was running out of cash during my final undergraduate year at a university in another city. Someone suggested I go to the corner bank and apply for a personal loan. I was very weak in four of the five C's and not overly confident on the character C.
In desperation, I walked into the bank and asked at the counter about the possibility of a Character Loan. The clerk said it was possible but, I had to talk with the manager.
"May I see the manager," I bravely asked.
"That's him over there," said the clerk. I looked over to see the former inspector.
"As you can see he has a customer with him right now. I don't think it will be long. Wait here and I will ask if he can see you," the clerk offered. I was torn between darting for the door and hoping he wouldn't recognize me. Perhaps, an apology was in order. Before I could decide I was being ushered into his office. He did recognize me! The greeting was warm. Within minutes I received his best wishes for a successful graduation and the exact amount of money I requested.
I sent him best wishes when I heard he was promoted to Vice-President of the bank. By the way, I repaid that loan from my first two pay cheques. There was a lot of character involved.
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