Many Startup and existing businesses are looking for funding
for their companies. What many aspiring and existing business owners don’t
realize is that their own personal credit score and history can be a stumbling
block to financing their businesses.
Valeria Edwards of Kansas State Research and Extension
offers some great tips on understanding credit scores, managing credit behavior
and reviewing your credit report.
According to Edwards, your credit score is a reflection of
your credit history, and helps lenders and others predict how likely you are to
make credit payments on time. There are five commonly recognized factors that
influence your credit score:
- Payment history
- Amount owed
- Length of credit history
- New credit
- Types of credit
While you can’t “repair” poor credit of the past, you can
move forward with better behavior in the future. Edwards recommends the
following common sense steps:
- Pay your bills on time.
- Keep your credit utilization below 30 percent of
- Keep older accounts open to show a long credit
- Acquire new credit thoughtfully.
- Have some account activity on each credit card
You won’t know if there is a problem with your credit report
if you don’t check it. The three national credit reporting agencies are
required by the Fair Credit Reporting Act to provide you a free copy of your
credit report each year. You can get that at www.annualcreditreport.com or call
- Once you’ve accessed your credit report, check a few things:
- Make sure your name is spelled correctly
- Make sure your social security number is
- Be sure you know about all accounts listed and
If you discover inaccurate or incomplete information, the
Federal Trade Commission (www.ftc.gov)
recommends specific actions, starting with notifying the reporting company of
errors in writing.
Finally, think twice about hiring a for-profit company to
investigate or repair your credit. You can take many steps for free, and there
are several nonprofit resources that can help. The FTC also warns against
“imposter” credit reporting sites that come with strings attached.
For a complete copy of Edwards’ publication on credit, go to Know Your Credit.
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