Credit Worthy

May 14, 2012  by in UnCategorized   

By Home Furnishings Business in on May 2012

Most of us learned at a relatively young age the importance of building and maintaining a strong, personal credit history. For most of my generation, that knowledge hit in college sometime around the first semester when all the credit card companies were doling out applications at the campus book store.

It really seemed very simple. Fill in the application, mail it in, and lo and behold, about four weeks later, the plain envelope arrived containing that magic piece of plastic.

My friends and I viewed that tiny plastic sliver as freedom. Freedom to buy clothes, shoes, food, and all the extra joys of college without having to hit up Mom and Dad for extra funds. Just one more taste of freedom to be found in that first year away from home.

As a college freshman, it was a glorious thing, and for me, that first card arrived during the days of easy credit. Basically all it took was a street address, a social security number and a predicted year of college graduation. Easy cheesy.

Simple €œmoney€; simple times. And, a very eye-opening, educational experience in the way credit works for a naive freshman. Thankfully, I had understanding parents who took the hard line with me when it came to digging out of the indebted hole in which I€™d put myself in pretty short order.

Nope, there were no handouts from the money gods; instead, I hit the pavement in search of a part-time job that meshed with my class schedule. With that job€”in retail, by the way€”I slowly dug myself out of that hole and learned a valuable lesson in managing personal credit, money and budgets.

I did watch those same friends (who€™d accompanied me on many shopping trips and dining-out adventures) get those parental handouts for their personal bailouts. Over the years, I€™ve seen those same friends struggle to maintain budgets, personal credit issues and other financial matters. Who€™s to say if my parents had jumped in and paid off my debt whether I€™d be in the same proverbial boat as my college pals?

Fast-forward to today and the business sector and the credit crunch. By no means is the furniture segment being bounced around like a hot potato by banks and financing companies like we saw a few years back starting in 2008. It€™s still no cakewalk for credit, but by all accounts, lending for furniture retailers and the consumer seems to be loosening some.
Banks and lenders are still cautious, mind you, but at least now, companies with the word €œfurniture€ in their title or business description aren€™t treated as if they€™re tattooed with a scarlet letter. For the last few years, the furniture segment has been ostracized by banks leery of the housing market, leery of the state of the furniture industry, and just plain leery of lending dollars or extending credit. That was painful!
In addition to being a bit more furniture-friendly, lenders seem to be loosening the belt on consumer credit, too.
Thank goodness!
As we all know, home furnishings purchases are right up there behind homes and automobiles as the most expensive purchases consumers make. Without reliable consumer credit, those purchases are not likely to be made. A big cash outlay for most consumers isn€™t likely in these still-rough economic times, but the ability to spread out payments over a year or so makes the purchase easier.
During the last few years, consumers have also gotten a bit wiser in the use of credit cards, making it easier for banks to offer credit.
In this issue, we€™ve talked with lenders and retailers€”all willing to share their stories and opinions on the state of the credit market for furniture retail.
Enjoy the read, and here€™s to learning where we as an industry are heading in the lending area.