Business Education Guide

Managing Your Credit - Image Matters!
by G.Y. Wyatt, Wyatt Group LLC, CEO

As an entrepreneur, you have a unique opportunity to build, maintain and get credit both individually and as a business owner. Starting a new business and looking good doesn’t come cheaply, particularly for small businesses.

When starting a new business and applying for business 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.

The most frequently used version of the credit score is the FICO score ranging between 350 and 950. Only about 35% of the population 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 the information on your credit report and your loan application.

Here are suggestions to manage your credit:

1: Get a copy of your credit report with credit scores and analyze both carefully.

2: Analyze your credit profile:

• Payment History - Delinquencies 30/60/90 Days?
• Outstanding debt; Length of credit history
• Severity and frequency of derogatory credit information such as bankruptcies, liens, charge-offs, and collections.
• The amount of credit used compared to the credit available to you.

3: Prioritize repayments / clean up strategy. Apply extra money to pay off small balances, while continuing to pay the minimums on the larger debt balances. Pay off debts with the highest interest rate first. When you’ve paid off the smaller balances, attack the larger ones.

4: Eliminate unnecessary debt and build your business credit. When you pay off a debt notify the company in writing that you want to close the account. Then, remove the card from your wallet. Avoid roll over balances, too.

5: Apply for a business credit account and lines of credit. Keep the business out of the “No Credit” status.

6: Initiate a credit recovery plan. Now is the time to change your free-spending ways and, start to keep track of your money.

7: Be careful about use of the equity in your home. Frequently, the money is used as a down payment on business operation debts, which are then charged up again.

Checking your credit report regularly enables you to ensure that your data is a true depiction of your credit record.

In some cases, it's wise to seek help from professionals. Get Started Now, Do It Today! Begin on a small scale - but get going!

Be patient, with discipline you can rebuild your credit profile sooner than you may think.

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