Think of it like a fitness goal: You want the end results right now, but in order to reach them, you have to focus and develop a plan. The good news is that preparing your credit doesn’t require any trips to the gym.
Here are five ways to get financially fit and become an attractive candidate for business financing:
1. Avoid do-it-yourself online loan applications.
Unfortunately, though the process for these is simple, the results can be painful. Many of the organizations that are set up to handle your application will pull your credit for a number of lenders before they make recommendations to you. The more inquiries you have on your credit report, the less appealing you are to lenders. You’re better off enlisting the help of one financial firm who will already know which lender(s) to utilize.
2. Pay your bills on time.
It may seem like a no-brainer, but many people, even those with the means to pay, procrastinate paying their monthly bills. If you’re one of those people who does it when they get around to it, consider setting up auto-pay accounts (many credit card companies and retailers encourage this because it ensures they’ll get their payment on time). That way, you’ll never miss a payment, and you’ll take the stress out of remembering multiple due dates.
3. Keep your credit cards open.
We all have them – cards that we set up and paid off long ago to stores where we never shop. Your instinct may be to cancel the account, but it actually makes more sense to keep it open. When you have cards with a zero balance, it helps your credit utilization score – a number that’s determined by comparing the amount of debt you have incurred on credit cards to your total limits.
4. Have 60 percent of your credit available on all cards.
To maintain a healthy credit utilization ratio, it’s actually safer to carry a low balance on several cards than to consolidate debt onto one card. It may not seem logical, but spreading your debt out will help your credit score. The simple rule of only charging up to 40 percent of your limit on each card is a good rule to ensure your score stays high.
5. Don’t agree to joint credit card accounts with your spouse.
Though your instinct may be to “share” everything as you enter wedded bliss, financially it’s much smarter to keep your accounts separate. That way, if the worst does happen and you suffer financial hardships, only one of your credit scores has to suffer, leaving you the ability to gain more credit on the other account in case of emergency. Use the account with the highest score to apply for business financing.
Follow all of these guidelines for a successful credit workout, and you’ll be on your way to finding business financing in no time.
Mr. Schmerler has taught hundreds of people at the Oglethorpe University Continuing Education Program the ins and out of personal credit and personal bankruptcy. He has explained how you can get your credit limit increased by purchasing an item close in value to your credit limit before your due date and returning it after your due date. This brings your credit card balance back to -0- but can influence your creditor to increase your credit limit.
Loren has also explained that if one spouse has damaged their credit, the other spouse can sometimes add that person onto their card as an authorized user. If the credit bureau gives credit history to the authorized user at the same time that it gives credit to the primary card holder, it will start to provide the person with damaged credit the beginning of a new credit history by using the “coat tail” of the primary card holder.
Mr. Schmerler has appeared as a call-in guest on Court TV and has appeared on the front page of The Christian Science Monitor. He has extensive experience helping people who have gone through Chapter 7 and Chapter 11 Personal Bankruptcies. He strongly feels that if a person’s business fails to succeed, the person should not be penalized by being sued by a Landlord or other creditor.
If you have any questions about buying or selling a business, contact Bottom Line Management, Inc: