August 2011 Newsletter

How to Select the Best Contractor for Your Remodeling Job

You've been dreaming about your gourmet kitchen, spa retreat bathroom or luxury master suite for years and you're finally ready to take the plunge. But, you're haunted by all the disaster stories you've heard about contractors who disappear or go belly up in the middle of a job. You can prevent your dream remodel from turning into a nightmare by following just five important steps.

1. Network to get reliable recommendations. Usually, the best way to find a contractor is by word of mouth. Ask people you know and trust -- neighbors, friends, co-workers, and family -- for referrals. Once you have at least three solid options, meet with each contractor to get a better understanding of how they work. Also make sure you click with them. After all, this person will practically be living at your house for the duration of your renovation. Trust your instincts. Bottom line is you have to feel comfortable.
2. Make the most of references. Ask each contractor for references and take the time to visit the homes in person. Talking over the phone will let you know how satisfied someone is, but an onsite inspection will let you evaluate the quality for yourself. Request that the contractor give you the name of one current client so you can see if he keeps the job site neat and safe. Another reference should be from a client whose project was finished more than a year ago so you can find out how the workmanship and materials are holding up.
3. All bids should be created equal. To be fair to yourself and the contractor, provide the exact same information to anyone bidding on your job. This could include anything from blueprints and budgets to specific brands, models, and materials. Also ask to have each bid broken down to the show line item cost of labor, materials, profit margins and other expenses. This will help you better determine where you might cut costs.
4. Dig deeper. Once you have decided which contractor seems right for you, confirm you have found “the one” by pulling a credit report from the Equifax Small Business site. This report will give you a solid understanding of how the contractor does business, as well as uncover any red flags. In addition to showing how the contractor honors his commitments to financial institutions and other businesses (and by correlation, possibly you), the Equifax Small Business Credit Report includes a public records section listing any bankruptcies, judgments or liens as well as business registration information obtained from the Secretary of State Office or other trusted sources. Also ask for proof of insurance for both the contractor and any subs he may have on the job. Then, contact the agency yourself to verify the policies are current.
5. Sign on the dotted line. The final step is to get it in writing. Every project should have a contract detailing payment schedules, specific materials and products to be used, how to handle change orders, and a start and completion date. If the contractor's credit report revealed any liens, request he obtain waivers for himself as well as any subcontractors and suppliers before starting the job.

As you can see, when it comes to selecting a contractor, only fools rush in. But, as you whip up a delectable meal in your gourmet kitchen, soak in your Jacuzzi tub or drift off to sleep in a newly renovated bedroom, you'll know your upfront effort was well worth it.

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From the Blog: How to plan for next year's home improvement expenses

by Ilyce R. Glink

Do you have a wish list of home-improvement projects? Have you thought about what you'll be able to afford to do this year and how much it will cost?

Over at my house, I've been making my list of home improvements and checking it twice. As we end the year, I thought I'd share a little bit about how I plan for upcoming home-improvement projects and offer a few suggestions on budgeting for these outsized expenses.

Next year, I'd really like to replace our carpet. When we bought this carpet, some twelve years ago, we never expected to keep it this long. It wasn't expensive (we were out of money after building our home addition), and, sure enough, after about seven years it started to fray, so you can imagine what it looks like now.

I've also thought about repainting a few rooms that have big cracks, and redecorating my sons' bathroom. Finally, I'd really like to put in a proper patio.

These are four projects that can be as big or small as you make them, so figuring out how much money you have available for home-improvement projects in the coming year is an important next step. It's a process my husband calls “What's the budget?”.

I actually hate when he asks me this question, because it forces me to really think about what I want (everything!) and what I can afford to spend (not as much as I'd like!). And that's the reality for most of us: we always could do more, but we'll be happy with a little less.

Coming off several tough years in the economy, you might not have the financial resources to pull off even one home-improvement job in 2011—and that's okay. I've put off my carpet project for about four years. With unemployment as high as it is, and a lot of economic uncertainty, you don't want to go into debt for something that you can live without. That's especially true if you wind up with a needed or necessary repair, like replacing a hot-water tank or fixing a leaky roof in the middle of winter.

Let's pick a number. Say you have $5,000 to spend on home-improvement projects this year. And let's say you have five projects on your list. If you prioritize your list and work your way from the top down, you might only have enough cash to accomplish one or two of your top projects.

At that point, you can go ahead and do those projects, or you can save up more money through the course of the year and do more. Or you can choose to complete three of the less-expensive projects and save a more expensive project for another year.

I can't tell you which way to go, but keep this in mind: if you are planning on selling your home in 2011, the home-improvement projects you choose to complete should all relate to the salability of the property.

In other words, if the home-improvement project you choose won't increase the value of the house or make it easier to sell, you should table that project and choose another.

As for me, I'll let you know at the end of 2011 which home-improvement projects I was able to get done.

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Interactive Tool: Test your knowledge with the Equifax Credit Quiz

Tip of the Month: Credit Report 101

As an Equifax customer, we know you're savvier than most when it comes to understanding credit. But do you examine your credit reports as thoroughly, and as often as you should?

If you're an active credit user, you probably use one or more credit cards regularly, and have a monthly mortgage payment, a car payment, and perhaps even a student loan – so it's likely your credit files see a flurry of activity with each monthly billing cycle. But you might not know that lenders are not required to report your monthly activity to all three major credit reporting agencies, so information in your credit reports could differ at each.

What's more, information in your credit files is used to calculate your credit scores – so it's important you know what's in them and ensure their accuracy. Consumers now have access to a variety of different credit scores in the marketplace, so it might be hard to navigate the numerous choices available. You can choose from one that's frequently used as a decisioning factor by lenders on whether to extend you credit and on what terms – or a myriad of others that provide a directional view, and might often represent a greater value. This type of score may be based on a similar algorithm, and can provide consumers with a helpful representation of their creditworthiness.

At Equifax, we offer products that make use of both the FICO® Score model and our proprietary Equifax Credit Score™ model, so you can choose the one that fits your needs best. Browse Equifax products.

Be sure to check out our updated Frequently Asked Questions portal for everything you need to know about understanding your credit.