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Do you have poor personal and/or business credit? If so, you may have already encountered challenges that having a bad credit score comes along with. But you may not be aware of some other aspects of your private and professional life that your credit rating can impact. Here are a few examples:
Building and maintaining a solid credit score is critical to achieving financial stability for yourself and for your business. Not sure where to begin to fix your credit score? Start with these 4 easy steps:
Although blissful ignorance may be more enjoyable, you can’t improve your credit score until you know exactly where you stand. It’s time to pull off that Band-Aid and start on the road to recovery by getting a copy of your personal and business credit reports. Here’s how:
Federal law requires each of the 3 major consumer credit reporting companies (Equifax, Experian, and TransUnion) to provide you with a free personal credit report every 12 months when requested. (Visit AnnualCreditReport.com to get yours.) You can either choose to request reports from all 3 agencies at once, or you can decide to order one at a time. If you have poor credit, you may want to do one at a time so that you have frequent monitoring of your credit score every quarter.
Unlike your personal credit report, which you can access free of charge, your business credit report unfortunately costs money. The price varies from agency to agency, but starts at roughly $40. The most common business credit reporting agencies that can create a report for your business are Dun & Bradstreet, Experian, and Equifax.
Once you have a copy of your credit report, review it closely. Look out for anything suspicious, or something that doesn’t look right such as:
If you find something that isn’t accurate, contact the credit reporting company to file a dispute.
Your credit utilization rate can be calculated by checking the amount of money you owe on all of your accounts divided by your total available credit. Let’s say you owe a combined total of $10,000 and your total available credit is $40,000. This would make your credit utilization rate 25%. As we mentioned in a previous blog post, you should always aim to keep your credit utilization at 30% or less of your total credit limit. This is the ideal number recommended by most credit reporting agencies and financial experts. Anything higher than the 30% threshold could adversely affect your credit score.
The best way to lower your credit utilization rate is to pay down your balance whenever possible. But if that isn’t a feasible option, you can lower your credit utilization ratio by increasing your total available credit. Two simple ways to accomplish this are by opening up new credit cards or lines of credit, or by contacting your credit card companies to see if you can get your credit limits increased.
One late payment can make a big difference on your credit score. Try to develop good credit habits by avoiding late payments. If you struggle to keep track of when your payments are due, consider the following tips:
As leaders in small business funding, we understand that there’s more to you and your business than your credit score. With us, you’ll get a personalized financing option, no matter the industry or credit score. Contact us today to learn more.
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