Your Personal and Business Credit Score Are Related

If you’re thinking of starting your own business, remember that having your personal finances in order will help you get off on the right foot in developing a good business credit score.

That business credit score could have a huge impact. It affects your interest and terms for loans, provides a professional approach for your business, and ensures that your attention is focused on building your business and fulfilling your dream.

For many people, personal finances provide the start-up expenses of a new venture. A sound way to cover start-up costs and establish a good business credit score is to obtain a one-time business loan. Compared to credit cards, a business loan typically costs less in interest rates. The key to getting the lowest possible rate is having your personal debt in order.

Because first-time business owners do not have an established business credit score, lenders will have to turn to your personal credit history. This is the basis for the credit terms; a good score will help you to earn the lower rates, so it is important to keep personal finances clean. Here are some tips.

The first step is to eliminate credit card debt. This is not the impossible mission you may think. And the payoff is worth it in the long-run. By paying off credit cards early, you can avoid the mounting debt that accumulates by paying off cards over several years. You can save thousands in interest fees by taking a few simple steps.

Take a look at your credit card statements. Choose the card with the highest interest rate and pay double the monthly minimum on that balance, while maintaining the monthly minimum on the other cards. When the highest-interest card is paid off, move on to the next-highest and make double the minimum payments there.

If nagging credit card debt has proven a burden for you, help to give your business a good credit score later by avoiding credit card purchases until the debt is cleared.

Another step in preparing to start a business with a good credit score is deceptively simple: pay your bills on time. Making sure that your rent, utilities, car payments and other obligations are met will show lenders that you are responsible, and will elevate your credit score while saving you in late-payment fees.

The final step is to review your credit report. You can get a copy by visiting http://www.freecreditreport.com. When reviewing the report, check for errors that could be affecting your credit score and your interest rate. Dispute any mistakes, through the credit-reporting agency. Creditors have 30 days to respond to a dispute, and in some cases the creditor may not even reply. You just may see some of that old debt expunged.

Good personal finances can be the key to a successful business venture. Following these easy steps will help to ensure that your business credit score is maintained right from the start, allowing you to live your dream!