National Get Smart About Credit Day: What You Should Know
Each year, on the third Thursday in October, the American Bankers Association and 5,000 volunteer bankers work to promote financial literacy. By doing this, their hope is to encourage participants to take control of this very important aspect of their lives.
We know that it’s not always possible to see a banker on this day, which is why we’re covering the topics that you should focus on when it comes to credit score education!
Credit Score Education: Everything You Need to Know
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.
How Can I Improve My Credit Score?
- Check your credit report– To find out what your credit score is, you’ll need to check your credit report. You can request a free credit score check from credit bureaus such as Experian, TransUnion, or Equifax. Once you know your score, you can work to improve it or correct errors in the report.
- Pay bills regularly and on time– One way that you can improve your credit score is to pay your bills on-time. This will help boost your score, especially if you’re consistent about this over time.
- Contact your lender if you’re having problems repaying a loan – Rather than defaulting, 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.
The Top Business Credit Tips You Should Follow:
Managing your business credit score can be done similarly to your personal credit by following the tips above, but with a few notable additions.
1. 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 hurt your business if you need financing at some point.
2. Ensure That Business Accounts Are Accurate
Adjusting your profits might seem like a good way to reduce your tax liability before building them up again when you need credit. This can be a red flag to credit bureaus. If they see a spike in one year, a decline in the next, and another spike the following year, this volatility might make them apprehensive. Therefore, you need to keep your company accounts completely accurate.
3. Obtain a Line 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 back over a period. If you do this, make sure to confirm that they’ll send your payment history to the credit check bureaus.
Conclusion: Invest in Your Financial Education
Hopefully, these credit tips will help you manage your credit more effectively. By taking the time to learn about credit on National Get Smart About Credit Day, you can help your business flourish!
Do you have any other tips for business owners that want to improve their credit? Share them with us in the comment section below!
Editor’s Note: This post was updated for accuracy and comprehensiveness in October 2019.
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.