If you are getting ready to launch your startup in the near future, chances are that you currently have a sizeable to-do list. Between creating a website, selecting your marketing initiatives, and everything in between, you may have forgotten about your credit score.
Having a strong credit score is essential for business owners for a number of reasons. First, your personal credit score could be reviewed if you are looking to obtain financing for your business. Second, having good credit will also help you pay less in interest when you do receive financing, which can help put thousands of dollars in your pocket. If your credit needs a bit of work before launching your startup, here are three things that you can do right away.
Get your debt to credit ratio under control
Once you’ve checked your credit score, it is important to review credit score range information to see where you stand. After you have taken this step, you can move forward with completing any damage control that is needed. First, assess where your debt to credit ratio stands (i.e. how much of your credit you are currently using). The lower your credit utilization the better. While some experts recommend using no more than 30% of your credit limit at any one time, having a $0 balance is obviously preferred. If you have a high balance on one or more credit cards, create a plan to pay down your debt.
Search for and remove errors on your credit report
In 2012, a study completed by the Federal Trade Commission (FTC) found that one in five Americans had errors on their credit reports that were later removed. With the frequent occurrence of credit reporting errors, it makes sense to check your credit report for mistakes. If you find yourself short on time at this point in your life, there are reputable companies that will work to remove errors on your credit report. Correcting one mistake has the potential to quickly boost your score.
Make payments on time
In order to keep your credit in good standing, make all of your payments on time. Not only will your credit score benefit, but you’ll avoid unnecessary late fees. If you have trouble remembering your due dates, set reminders in your phone. A better option (when available) is to schedule automatic payments so you’ll never have to keep track of due dates again.
Building your credit prior to launching your startup
Prior to launching your startup, take some time to evaluate your personal credit. Not only is having good credit beneficial for your life, but it is also crucial for the future of your business. A few extra hours of work now could lead to much needed funding, better interest rates, and less financial stress in the future.