What’s your credit score? Do you know the specific number, or at least have a good ballpark estimate of what it is? If you’re like most entrepreneurs, you’re at least familiar with what your score is. But do you know the significance of that number and how it affects your ability to grow your business?
For an entrepreneur – especially one involved in a sole proprietorship or partnership – a personal credit score carries a lot of weight when it comes to securing financing and establishing sound relationships with investors and lenders. If you aren’t familiar with credit scores and how they rank, here are the numbers creditors review:
If you have a score below 700, then you need to be looking at ways you can improve. But even if you have a “good” or “excellent” score, it’s wise to understand what’s impacting your score and how you can continue to maintain it.
Here are a few other things you need to know:
In order to understand credit and how lenders evaluate your credit-worthiness, you have to be familiar with what the industry calls the “5 C’s of Credit.” They are:
Just because you have a low credit score doesn’t mean you’re stuck with it. Your credit score is a constantly fluctuating number and it can move in either direction. If you have a low credit score and aren’t quite sure how it’s sunk so low, it might be worth your time to hire a credit repair company to fix any errors that may be present on your report.
Your credit score is something that you should be monitoring on a regular basis. It doesn’t matter if your score is bad, excellent, or somewhere in between. With free services like Credit Karma and Credit Sesame, there’s really no excuse not to be on top of your score.
In addition to pursuing credit repair to identify and correct any issues on your credit report, there are plenty of other steps you can take to bolster a poor score.
The best thing you can do is pay down any outstanding debts and remain current with all payments. Once you’ve got this under control, look into raising your credit limit in an effort to lower your credit utilization rate. This is perhaps the easiest way to boost your score in the short-term.
It’s easy to ignore a credit score until you realize that it impacts the business decisions you make. While you don’t want to spend all of your time and energy focusing on your credit score, it would be wise to give it the weight it deserves.