David Knoble, CPA, PLLC

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Managing Your Credit Score

A small busi­ness owner needs credit more than most.  In this econ­omy, credit is the lifeblood that sup­ple­ments what cash a busi­ness still has.  Main­tain­ing a good credit score isn’t impos­si­ble, but it takes time and edu­ca­tion.  Here we dis­cuss a few ways to help keep your credit score in good standing.

First, fig­ure out a base­line.  Get your credit scores from each of the three main bureaus — Equifax, Exper­ian and Tran­sUnion.  They are required to pro­vide you with at least one report per year for free.  Not only do you want to see your cur­rent score, but you want to be sure that there are not any mis­takes on your report that need fixed.  Based on expe­ri­ence, fix­ing errors on a credit report can some­times take years!

Sec­ond, be sure that you always pay bills on time.  Pay­ing early is fine and maybe a great habit to get into, how­ever, pay­ing early is the same as pay­ing on time when it comes to a credit scrore.  There is no sub­sti­tute for pay­ing on time — miss a pay­ment too long and your credit score decreases rapidly, pay it on time and it will very slowly climb.  At the same time, be sure you do not have any col­lec­tions entered against you.  If you do, get them cleared up and removed.

Third, be care­ful how you man­age the credit you have.  Any bal­ance that is over 30% of your credit limit at the time of the report is low­er­ing their credit score.  Thus, even if you pay off your credit card bal­ance each month (which I do), you will be car­ry­ing a bal­ance at month end.  If that interim bal­ance is high, your score may be neg­a­tively impacted.  Fix this prob­lem by ask­ing for a high­ter credit limt or mak­ing sure you spend less.

Finally, be sure you are not get­ting credit inquiries and fill­ing out mul­ti­ple credit appli­ca­tions.  While cer­tain inquiries about credit do not harm your credit score, too many inquiries and reviews of your full credit report will lower that score.

Do these things and your score should help you bor­row when you need to!

© 2009, david.knoble
by David Kno­ble, CPA, PLLC
Serv­ing Non-Profits, Busi­nesses & Indi­vid­u­als
Rock Hill, SC

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