National Get Smart About Credit Day
We know that it’s not always possible to see a banker on this day, so instead you should check out our credit score education and business credit tips!
Credit score education
What is a credit score?
Put simply, it’s a way for banks and lenders to assess how qualified you are to receive money. They use the score to determine if you qualify for a loan or credit, what the risk is of you failing to repay it and in some cases, what rates and terms you’ll receive. The good news is that there are things that you can do to improve your credit score, so that you can make receiving financing easier.
What can I do to improve my credit score?
- Check your credit report – It starts with knowing what your credit score is. You can request a free credit score check from credit bureaus such as Experian, TransUnion or Equifax. Once you know your score, you can take action to improve it or correct errors in the report.
- Pay bills regularly and on time – One way of improving your credit score is by paying bills regularly and on time. This will help boost your score, especially if you are consistent about this over time.
- If you have a loan, contact your lender if you’re having problems paying it back – Rather than defaulting on a repayment, contact your lender if you’re struggling with the regular payments. They might be able to adjust the terms or consolidate some of the loans without it majorly affecting your credit history.
- Build credit history slowly – Building a good credit score takes time, and requires you to prove that you’re responsible with your money. This means you should start off small, such as opening a monthly cell phone or internet contract, rather than taking out as many credit cards as possible during a short period.
Business Credit tips
Managing your business credit score can be done similarly to your personal credit by following the tips above, but with a few notable additions.
Keep business and personal credit separate
Your business finances should be kept separate from your personal finances, and that means opening a business bank account with a business credit card. For small businesses and self-employed individuals, this might seem tedious, but mixing personal and business finances can create a trouble should your business need financing at some point.
Keep your business accounts accurate
Adjusting your profits might seem like a good idea for reducing your tax liability before building them up again when you need credit. In reality, this can be a red flag to credit bureaus. If they see a spike in one year, a decline in the next and a further spike the following year, this volatility might make them anxious. Therefore, you need to keep your company accounts accurate and honest.
Obtain lines of credit from your suppliers
If you’re using suppliers such as Home Depot or FedEx, ask them to set up an account for you so that you can pay them over a period of time. The important thing to confirm with them is that they send your payment history to the credit check bureaus.
Hopefully, our credit tips will help you manage your credit more effectively. Taking the time to focus on your credit score on days like National Get Smart About Credit Day will help your business flourish!
Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author's alone, and have not been reviewed, approved, or otherwise endorsed by any of these entities.