Take Control of Your Personal Credit + How it Impacts Your Business
What is a credit report and why is it important?
A credit report is a detailed summary of your personal credit history, including all of your loans, credit cards, and other forms of credit. It also includes information about your payment history and any outstanding debts.
Where to Start?
Navigating your personal credit can be a daunting task, but it can be helpful to achieve and maintain a healthy financial situation. The first step is understanding your credit report. Your credit score is a three-digit number that ranges from 300 to 850, and it is based on the information in your credit report. A higher credit score means a better credit history and a lower risk of defaulting on loans. These reports take into account payment history, debt, credit utilization rate, loans, credit age and new credit applications. You can obtain your credit score for free from various online services including the three major credit reporting agencies: Equifax, Experian, and TransUnion.
How does your personal credit score impact your business?
Your credit score helps lenders identify how well you manage your personal finances and helps them identify the risk involved in lending you money. They can see details such as your repayment history and whether or not you have ever declared bankruptcy. While the system is far from perfect, it is one of the factors that conventional lenders use to help identify whether you are eligible for a business loan and can dictate:
Whether you are approved for a loan
Terms and payment schedules
Interest rates
Total loan amount
When it comes to credit, B:Side operates in a slightly different manner then traditional lenders, and it’s our intent to help businesses that don’t meet the general eligibility criteria. Learn more in this article.
Monitor & Improve Your Credit
If your credit score is not as high as you would like, there are steps you can take to improve it. One of the most important things to do is to pay your bills on time. Late payments can have a significant impact on your credit score. You should also try to reduce your debt-to-income ratio by paying off outstanding debts and avoiding taking on new debts.
In addition, Experian launched Experian Boost, which allows people to report non-debt payments, such as rent, utilities and video-streaming services. This can allow people who have low or no credit scores to be able create a credit history based on their bills.
Once you have achieved a good credit score, it is strategic to maintain it. This means continuing to pay your bills on time, keeping your debt-to-income ratio low, and monitoring your credit report and score regularly. You should also be aware of any suspicious activity on your credit report and take steps to address it immediately.
By understanding your credit report, monitoring your credit score and maintaining good credit, you can make borrowing from conventional lenders an easier process.
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