"Is it the beginning of the end or the end of the beginning."

An article in Monday's Financial Times titled "The beginning of the end or the end of the beginning" filled me with enthusiasm that we were approaching the end of the "Credit Crisis". The author pointed to the market's gain since the Fed's bailout of Bear Stearns as the benchmark event that was the tipping point towards a bright future.

The author must of performed a gut check when GE shocked the market on Friday. Not only did GE's earnings debacle create concern regarding the health of the US economy (given GE's product diversification), but the write-downs in GE Capital and other Real Estate business lines reminded many that the credit crisis was still around. After deep thought the author published the article on Monday, perhaps I would have done the same.

On Monday, it was announced that Wachovia needed a $7 billion capital infusion due to write-downs and an unexpectedly worse US economy. This announcement came on the heels of Washington Mutual's $7 billion capital infusion by a private equity firm.

Wachovia's announcement peaked my interests because much of the capital infusion went to build capital reserves against a failing US economy. While the US economy was heading towards little to no growth projections prior to the credit crisis hitting the financial markets, the almost collapse of the banking system could mark the next phase of the credit turmoil: The Credit Crunch Phase.

Financial institutions can shore up capital ratios by injecting capital to the business and/or restricting lending. Withholding credit pinches the checkbooks of many main street businesses. Business owners then look to pare payrolls, shelve capital expenditures plans, and reduce other employee benefits (higher health care deductibles. This circular equation puts the economy in a precarious situation and could ultimately lead to a prolonged recession.

The point is with many financial stocks reporting earnings this week, we should get a glimpse into the health of the US financial system. J.P Morgan, Merril Lynch and Citigroup all report earnings this week with more to follow next week. Watch and read carefully the earnings reports and watch for signs of credit restrictions and dire predictions for the US economy. Pay close attention to the smaller regional banks that so far have been hidding behind the headlines.

So only after this and next week will we know if it's the beginning of the end or the end of the beginning.

FICO Scores Determine Your Commercial Loan Interest Rate

"What is the borrower's mid-point FICO score?" This is a question I get from commercial loan underwriters within the first few minutes of a pre-qualification phone call. Why? Well, let's go over what they know before I call them about your opportunity.

Private lenders or commercial banks know the quality of the subject type property and the appropriate loan to value. They also know the likely default rate of the tenants in the property or of the owner occupied business in the building. They also have a feel for the economic circumstances surrounding the borrower's geography. If you look at their websites, you get a sense as to what these companies already know. So why do that want to know your mid-point FICO score.

Simply, FICO scores are the key determinate of the total risk premium applied to the lender's cost of funds. More simply, it affects your interest rate. Your FICO scores - for the most part - shows the lender your willingness to pay your bills, and also how leveraged is your personal cash flow. How much of an impact can your FICO score have?

Take the last two deals that I closed. Both deals involved similar mixed use properties. All properties had no vacancies, and good quality tenants. So when one deal had an interest rate of 10.25% and the other 7.25%, I knew the only difference was the borrowers' FICO score. The borrower with the lower interest rate had a FICO score approximately 95 points better than the other borrower. In dollars, the borrower with the lower (worse) FICO score paid approximately $18K a year in additional interest.

So be careful with your FICO score. It can cost or save you a lot of money on your commercial deal.