Managing Your Credit : Image Matters!
By G. Y. Wyatt, Wyatt Group LLC, CEO
You, as an entrepreneur, have the opportunity to build,
maintain and get credit, both individually and as a business owner. Starting
a business and looking good doesn’t come cheap, particularly for
small businesses.
When starting a new business and applying for credit, most lenders will
require a personal guarantee. Is your personal credit profile a scarlet
letter or golden halo?
Our recommendation is to separate your business and personal credit and
build a business credit profile.
Most of today’s lending decisions are influenced by your credit
score. The higher your score, the better your chances for good loan rates
and approvals. The lower the credit score, the higher your interest rates
or denial of your loan. Your credit score represents the condition of
your financial health – your image.
The most frequently used version of the credit score is the FICO score,
ranging between 350 and 950. Only about 35percent of the population’s
scores are above 750.
Various factors determine your credit score, including: payment history,
outstanding debt, length of credit history, severity and frequency of
derogatory information.
While your credit score is a key determinant of your “creditworthiness”,
lenders also examine other information in your credit report and your
loan application.
Following are suggestions to manage your credit.
Get a copy of your credit report with credit scores and analyze both carefully.
Checking your credit report regularly enables you to ensure that your
data is a true depiction of your credit record.
Analyze your credit profile:
Payment history – delinquencies 30/60/90 days?
Outstanding debt; length of credit history?
Derogatory credit information such as bankruptcies, liens, charge-offs
and collections.
The amount of credit used compared to the credit available to you.
Initiate a credit management plan. Now is the time to change your free-spending
ways and start to keep track of your money. In some cases, it is wise
to seek help from professionals. Begin on a small scale – but get
started!
Prioritize repayments. Apply extra money to pay off those small credit
balances. Pay off debts with the highest interest rate first. When you’ve
paid off the smaller credit balances, attack the larger ones.
Avoid the roll over and balance transfer traps when eliminating unnecessary
debt or building your business credit. Once you have paid off a bad debt,
notify the company in writing that you want to close the account. Then,
remove that card from your wallet.
Apply for a business credit account and lines of credit. Keep the business
out of the “no credit” status.
Be patient, with discipline you can build a good credit profile sooner
than you may think.
Remember : “Your Image Matters!”
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