How to Improve Your Credit Score

Whether you like it or not, the ugly truth is your credit report and credit score have a great deal of power. They serve as key tools that measure the financial risk you pose to lenders. The higher the score, the lower the risk. Credit scores and reports are used to determine whether or not you are approved for a mortgage, loan, or even a bank account and can positively and negatively affect the interest rates on your credit cards and other borrowing methods. Therefore, it is extremely beneficial to do what you can now to improve your credit score and resolve any errors on your report. This will prevent this information from haunting the remainder of your financial life.

According to a recent Federal Trade Commission report, more than one-in-four credit reports contain errors. Make sure to check your credit report for errors or potential fraud once each year. You can order a free copy of your credit report from the three major credit reporting agencies once every 12 months by visiting www.annualcreditreport.com. The site is run by the three credit reporting agencies: Equifax, Experian, and TransUnion. Keep in mind that this is the only free resource to receive your official credit report. Do not fall for any other company that advertises “free” credit reports because these companies will make you sign up and pay for other services.

After you check out your credit report, the next step to take is to fix any errors. Contact each of the three reporting agencies to report the errors, and begin the process to correct them. This often requires sending in a letter, including your name and address, exactly which items you’d like to dispute and why. Include copies of supporting documentation and a copy of your report with the errors circled or highlighted. Also contact the provider of the incorrect information and have it fixed on their end, so the problem does not reappear in the future. If you still encounter issues, visit The Federal Trade Commission to learn more about your rights when dealing with credit reporting agencies.

It’s always good to be building good credit because this will help you out in the future. Here are some quick and easy tips on how to maintain a good credit score or make some necessary improvements:

• -Keep track of your bills and make sure to pay them on time.
• 
  

• -Do not max out your credit cards. Keep your credit card balances low, and try to limit your purchases to less than 25% of your credit limit at any time, even if you always pay off your bills in full.
• 
  

• -Limit the number of credit cards you open, including retail store cards. They may come with great perks, but many cards show lenders that you tend to borrow money at high rates over short periods of time, which signals risky borrowing behavior.
• 
  

• -Keep open old cards with a long credit history. They may help your credit score because the length of your credit history accounts for 15% of your score. The higher the average age of your accounts, the more it could improve your score.
• 
  

• -Remember to pay traffic or parking tickets or even library fines. If these bills end up at a collection agency, it could drop your credit score by as much as 100 points! Make sure to also keep records of these sorts of payments, in case you need to dispute an error.
• 
  

For more information, visit BBB’s Managing Credit – Made Simpler. There you will find tips on paying off balances, managing your budget, getting financial help, and protecting yourself from credit fraud.

Choosing a Credit Card for Your Business

For small business owners, now is actually a good time to research how a business credit card can benefit operations, or to re-evaluate existing business credit card plans to take advantage of best rates and current offers in the marketplace. 


Basically, there are two options for business credit cards - small business and corporate credit cards. The decision on which option to choose is based in large part on the size of the business and who is responsible for the debt. 

As the names imply, a corporate credit card is for large businesses and corporations and the burden of debt typically falls on the corporation. A business credit card is intended for smaller businesses with sole-proprietors and the burden of debt is on the owner. Unless the business is producing more than $2 million annually in gross income, a corporate credit card isn’t an option.

A business credit card is very similar to a personal credit card and carries a credit limit and minimum monthly payments. Business owners and any employee who will use the card will typically undergo a credit check.

BBB offers tips for choosing and implementing a new business credit card approach:

Do your research. Many banks and credit card companies are making various offers, with some attractive perks that may fit nicely with your business needs. But offers run the gamut, so be choosy. You’ll want to find out about offers from both your local banks and national credit card companies.

Don’t get burned by special offers. As noted, there are many offers and plans available for small business owners, but pay specific attention to business credit card plans with introductory offers for 0% APR. While this may be a good option for an immediate, high-end purchase to support your business, you need to find out what the conditions for the APR are – under what conditions will it rise, and what are your options if it does rise. Beware of getting stuck with a high APR after the introductory period.

Consider the rewards. Many cards will offer perks for both you and your employees including discounts with preferred vendors and airlines, as well as rewards points. 

Lay the ground rules. Make sure your employees know exactly what can and cannot be charged on the credit card. Some cards will let you adjust the credit limit on individual employee cards, as well as limit where the cards can be used. 

For additional tips on managing your business’s finances, go to bbb.org.

How to Manage Your Business' Credit Wisely

Whether you’re in the beginning stages of starting up your own business or looking to manage your current business’ credit more efficiently, it’s always important to stay on top of your finances. As your business starts to grow, it’s important to build a good credit record for your business that is separate from your personal credit record.

BBB recommends following these simple steps to manage your business’ credit:

Establish a consistent identity. Always use the same business name, address and phone number from the beginning, so it will be easy for the credit reporting agencies to keep your records in one file. Consider incorporating to legally establish a business identity that is separate from your personal identity.

Open your first accounts. Get a separate checking account for your business. Also open an account with an office supply firm or other supplier that reports the transactions to business credit reporting agencies. Make small charges and pay them immediately — before the invoice even arrives (unlike personal credit scores, you’ll get extra credit for paying before the due date).

Provide key documentation. Lenders will generally ask for your business’ tax records and earnings statements for the past few years so they can see how much you have earned in the past. And they may also ask for a business plan so they can assess your potential for future earnings. They are often interested in looking at your cash flow in relation to expenses and your total debt in relation to your earnings. Provide all of this documentation along with explanations to present the strongest case, especially if you have irregular earnings throughout the year, to prove to lenders that you expect to earn enough money to pay your bills in the future.

Apply for a DUNS number from Dun & Bradstreet, one of the major business credit reporting agencies (go to www.dnb.com). It usually takes 30 days to establish a DUNS number, or you can pay extra for an expedited account. Then make sure that the companies where you have trade accounts are reporting the information about your on-time payments to Dun & Bradstreet. It’s also a good idea to provide extra information about your business for your credit file. This is where potential lenders and others will find out about your business and the likelihood that you’ll make on-time payments for your loans, equipment leases and office leases, which will affect the terms and rates. After you have a DUNS number, open a few more trade accounts with other companies that send information to the credit-reporting agencies, make small charges, and pay those bills early, too. Check your account for errors and to make sure you’re getting credit for your early payments.

Check your business’ credit score. Similar to a credit score for individuals, a PAYDEX score distills the information in your Dun & Bradstreet credit report into one number, which shows potential lenders the likelihood that you’ll make your payments on time. These scores range from a low of 0 to a high of 100. A score of 80 to 100 generally means that you pay your bills before the due date; 50 to 79 means a medium risk of late payment (averages 30 days or less beyond the loan’s terms); and a score of 0 to 49 means a high risk of late payment.