Today, a good credit score can affect many aspects of your personal and work life. As a small business owner, your credit can impact your ability to lease an office, lease or purchase a car, truck or other necessary equipment; obtain a business loan, secure insurance and more. A low score can send a signal to lenders, landlords, and policy holders that you might be a risk – thus raising interest rates or you could be denied the opportunity to buy or rent property or vehicles, as well as get insurance for your home or business.
If you are seeking a small business loan and do not have pristine credit, there are alternatives, but it’s much better to start your search for a loan with a good credit score?
So how can you improve and stay on control of your credit score? Here are some tips – the first being the most obvious – paying all of your bills on time. That said, emergencies come up that can lead to default – a medical emergency; being laid off from a job and more can prevent people from paying bills in a timely manner which can lead to a lower score for even the most responsible of bill payers. But there are options for everyone trying to keep their credit scores at a decent level.
Keep Your Debt Low and Pay Bills – Pay the Minimum in Hard Times
- The most important tip is to pay bills on time – this will have the most effect on your credit score. If you are undergoing a difficult financial period, try to pay the minimum so you can keep your credit score afloat.
- Keep your credit card balances low and maintain the minimum number of cards necessary. Even during hard times, remember, a high credit debt will adversely affect your credit score.
- Only apply for credit cards and loans when absolutely necessary.
Check Your Credit Score Once a Year
- Every person is entitled to a free credit report once a year. This is important – as it details out all of your information and transactions. If there are errors – you can report those.
- If you find errors in your credit report, you can write to the credit agency and have them investigate. If you have proof, you should send along with your correspondence.
- Here are several options for getting free credit scores/reports:
- Equifax at http://www.credit.equifax.com
- Experian at http://www.experian.com
- Trans Union at http://www.transunion.com
- You can also contact the Federal Trade Commission for consumer brochures on credit at http://www.ftc.gov
What to do if a Credit Score Affects You:
- Two federal laws — the Equal Credit Opportunity Act (ECOA), as implemented by Regulation B, and the Fair Credit Reporting Act (FCRA) requires a company to tell you if they have taken an “adverse action” against you, in whole or in part, because of your credit report information. If you have been adversely affected, they must also tell you the name of the national credit agency that supplied the information so that you can get a free copy of your credit report and correct any errors.
In the wake of the Experian cybersecurity breach that may affect up to 143 million Americans, it is more important than ever to pay attention to your credit rating and to take immediate action if there are serious issues or problems.