The credit market

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In today's world, most of us need to borrow to buy a home or a car, go to school or start a business. But the credit crisis has banks too scared to lend. Is it really as bad as they say? Here's what it takes to get funding in today's tough market.

How tough is it really to get a loan today?

For months you've likely been hearing about (or even experiencing) tight credit: frozen home-equity lines of credit, lower credit-card limits, tougher loan standards. That could be just the beginning. One reason regulators have been so anxious to step in during this crisis is the fear that consumer and business borrowing will be shut off altogether.

For now, though, many people are still able to get loans. "If you have good credit, job stability and low debt, there is a good likelihood that you will get a mortgage," says Marc Savitt, president of the National Association of Mortgage Brokers.

In general you'll need a 660 credit score and a 10% down payment to qualify for a loan. Another important criterion is how much of your monthly income goes to repaying all your debts. Today lenders want you to cap that at 41% of your income.

Getting a small business loan is similarly tough. But if you can borrow and have the itch to strike out on your own, small business experts say economic downturns can be a good time to start a venture. In bad times, you may find better deals on, say, advertising and office space. And some of the land mines are more apparent.

"When existing companies are stumbling, it's more obvious what mistakes are to be avoided," says Bob Chalfin, a Metuchen, N.J. small business adviser and a lecturer at the Wharton business school. "When there is change, there is opportunity."

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