What are the steps to start Your New Business with a Clean Credit Score

Many people dream of owning their personal business. However, before you give wings to your dream, it is very important to organize your personal finances. At this stage, you will be required to put in your own personal finances to get started with your business. However, to initiate successfully, it is very important that you use a ‘professional eye’ approach towards your personal finances.

Start-up expenses can be huge but it is advisable that you use your own personal finances to carry out the initial expenses. Avoid funding these expenses on credit or else you will end up with huge credit debt. You also have the option to go for a business loan. This is a better option as compared to credit card because it is a one-time loan with usually lower interest rates as compared to credit card.

However, there is a connection between your credit card and business loan that you must understand in order to successfully apply for a business loan. The relationship is that your credit card debt must be in order before you could apply for business loan. This means that you must maintain clear credit score if you wish to win the business loan without any hassle.

If you do not possess an organized business loan history, then lenders will look up to your personal credit score to negotiate loan terms. Do not let credit score problems affect your business set-up in its initial stages.

Your credit score is indeed a very important number for your personal business career. You will need to show it off for various purposes once you are running your own business. It works as the determining factors, especially for negotiating loan application and interest rates.

Three Steps to Set-Up Your Business with Clean Credit Score

As a new business owner, you must definitely look for lower interest rates on any credit finance or loan you acquire. This will give a solid base for your business to begin.

Step 1 – Pay Your Credit Card Debt

After identifying your credit weakness, take appropriate measures to improve your standing. The basic goal you will be working for is to eliminate any credit card debt you are liable to pay. At first this may not seem to be the best idea, but it is true, paying your debt faster can actually ease down your debt payment. It will also cause it to be less expensive eliminating the additional interest you will be required to pay otherwise.

The idea is to make double payments on the minimum balance of the debt with the highest interest liability. You can manage the rest of your credit liability with lower interest rates the way you like. By paying off the debt with the highest interest rate first; you can save yourself from paying the additional amount of the extra interest for a particular debt liability.

Once the highest is paid, move on the debt liability with the next highest interest rate and so on. Eventually, this will lead you to clear out your credit card debt maintaining a healthy credit score for you.

Step 2 – Study Your Credit Report

How often do you check your credit report? You must do it often in order to ensure there are no mistakes that are reflecting any negative effects on your credit score as well as your interest rates.

In case you find a mistake, you can seek assistance from the credit-reporting agency and dispute them. Your dispute will be responded within 30 days successfully. This is indeed worth trying since you have nothing to lose in this procedure, except for bad credit score.

Step 3 – Pay Bills

The negotiation over your business loan will not solely be based on your debt liability payment. You must also show that you are responsible when it comes to your bills and debt payments. You can do this by showing a good history of your rent, car payments, or utility bills. In short, keeping all the payables and debts in place and organized will help you achieve business loan with a lower interest rate.

About the Author: The article is provided by Rosette Summer. She thinks that good finances make successful business! But in case this does not persuade you, visit Consolidated Credit’s website for debt relief advice.

Leave a Reply

Your email address will not be published. Required fields are marked *