Who looks at your credit score? Let’s see, suppliers, vendors, lessors, landlords, lending institutions, and business customers can look at your commercial credit score. Insurance companies, landlords, employers, lending institution or anyone issuing credit can look at your personal credit score. Do you think it’s important to know about your credit score and your credit worthiness when you own a business? You betcha!
Do tell, what is a credit score?
Every business that extends credit wants a degree of trust in ensuring that we are able to pay what we owe when it’s due. This includes car dealerships, credit card companies, furniture stores, leasing companies and mortgage lenders just to name a few. A credit score estimates your credit risk based on your credit report. For this they rely on credit reporting agencies for this information.
There are three major reporting agencies that businesses rely on for this information;
You can definitely improve your credit score but it is important to know that quick fixes can backfire. Raising your score is like getting your body in shape, it takes time, discipline and dedication.
What’s in Your Credit Score?
Payment History: Approximately 35% of your score is based on your payment history.
Amounts Owed: Approximately 30% of your score is based on how much you owe.
The Length of Credit History: This affects approximately 15% of your score.
New Credit Established:
The types of credit in use: This accounts for approximately 10% of your score.
Five Surefire Ways to Improve Your Credit Score
1. Pay your bills. Pay the full payment before its due date. Late or minimum only payments will greatly lower your FICO score. Of course collections and bankruptcies are surefire credit killers.
2. Watch your balances. Keep them low on your revolving credit accounts. When you exceed 50% of your credit limit, it will lower your FICO score. Strive to keep your balances at 30% of your credit limit. Keep smaller balances and spread them out over more accounts. A maxed out card may harm your score especially if you have more than one that is maxed out.
3. Old and long credit are assets. Rather that close your old accounts, keep them open and stop using the cards. Cut them up. This will help your FICO score. A longer credit history is an asset. The overall unused credits on these older accounts look attractive on your balance-to-limit ratio.
4. Avoid opening new accounts. If you apply for credit frequently, or when a business inquires about new credit in your name, these inquiries are recorded. Your score does allow for rate shopping but be aware of the details regarding rate shopping and inquiries. New accounts and applications for credit can make a person look risky or less stable.
5. Diversify your accounts. Having a variety of loans can help with your credit score such as car loans, mortgage loans rather that just having credit cards. It paints a nice picture showing good credit management.
There are many things that are affected by your credit score besides just qualifying for credit. Your credit score affects the rate that you get on new sources of credit such as credit cards, mortgage loans and auto loans for example. Your credit score also affects your car insurance premiums. Insurance companies believe that a person’s credit history also predicts accident frequency as well as fraudulent claims.
Check your credit score frequently. This will help you look for mistakes and catch possible identity theft. You are allowed one free credit report per year from all three of the reporting agencies. For more information contact the Annual Credit Report Service at:
P.O. Box 105281
Atlanta, CA 3033348-5281
To find more about your commercial credit score visit http://www.dandb.com/