Your personal credit score is important for your overall health.
In my role as a financial adviser to small business owners I seldom ask my clients “ How are you?”This traditional greeting has been replaced with a more meaningful greeting:
“How is your credit,” or “What is your FICO score?” The client’s response allows me to evaluate realistic options for obtaining the capital needed for business expansion. A FICO score of 680 will illicit interest and command a favorable interest rate from an institutional lender. A 680 score doesn’t assure the client that the loan is approved, but it does allow the lender the opportunity to start the loan process. Loan requests with credit scores below the 680 norm are attractive to lenders who do not evaluate credit risk, but charge much higher rates to compensate for the increased risk. I advise all business owners seeking to access funds for business growth to work on their personal credit before they approach institutional lenders. You can pull your personal FICO score from one of the three bureaus, Experian, Equifax or TransUnion, without impacting your credit rating. This is referred to as a self pull.There are five criteria than will affect your Fico Score:
- Delinquencies – late payments on outstanding debt
- Debt Ratio – exceeding 35% of your available credit
- Credit Mix – a mix of types of debt is favorable – these include installment loans, mortgages, and credit cards
- The Age of the Credit file – long term accounts are favorable