What’s really holding you back from having an 850 credit score?

As you already know, your credit score is an extremely important three digit number. It sets the stage on whether you will get approved for a loan, and the interest rate you’ll pay on a new home loan, refinance or credit card.

Here’s a closer look at what influences your credit score 

Payment History – The most influential category when it comes to your credit score. Your payment history is a record of your payments over time. Lenders and creditors look to this as a sign on whether you will make late payments or miss them altogether.

Age & Type of Credit – Each account on your credit report has a “date opened” field. This is the age of your account or how long it has been open. As for type of credit, the different kinds of credit you have impact your report and score. For example, credit card, mortgage, and auto loans.

% of Credit Limit Used – This is otherwise known as utilization and it evaluates the overall usage of your available credit. Experts suggest keeping your utilization under 30% on each of your accounts.

Total Balances/Debt – This is the total amount of money you owe to each of your lenders.

Recent Credit Behavior – Opening new accounts and the credit inquiries for a mortgage or credit card, all fall under this category.

Available Credit – Your available credit is the amount of credit that’s available to you at any given time. It’s also tied to your percentage of credit limit used, or utilization

For Example my credit score is 715 due to following reasons:

1.) The balances on your accounts are too high compared to loan amounts

2.) Open real estate account balances are too high compared to their loan amounts

As for reasons 1 and 2, I bought a brand new house and a whole lot of brand new furniture to fill it a few months ago. I expected my credit score to take a hit and my expectations were right on par. Now, I need to pay down my mortgage and my furniture debt, on time, every time each month. It’s going to take some time (especially on my mortgage), but every responsible payment helps. At times, I’ve also made an extra payment or two on my furniture when I can.

3.) The date you opened your oldest account is too recent

My oldest open account is my student loan account. As my oldest open account, it sets the length of my overall credit history and you can’t change history. I have to be patient and my score will benefit as my account ages.

4.) Available credit on your open bankcard or revolving account is too low

My available credit limit is too low because of the big furniture purchases I mentioned in 1 and 2 this reason code highlights the fact that carrying higher balances can affect multiple categories. But, as I work hard to pay down those balances, that one action will have a positive affect across the board.

If you’re looking to improve your credit book your appointment at www.cibilconsultants.com click now !

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Keep business credit separate from your personal credit

For many entrepreneurs and solopreneurs, it’s common to create a business with personal financial resources.For someone with a solo business and no employees, it’s especially tempting to use  business financial resources as  personal financial resources. After all,income is  family’s income. It all goes to the same place, so it doesn’t matter if it’s a little mixed up, right?

Actually, it does matter. Keeping your business finances separate from your personal finances is important if you want to make things easier for you, and reduce trouble come tax time.

Protect your personal finances from your business setbacks

When you first start with your business, your personal assets do matter. You might need to use your own capital for startup costs, and there is a good chance that your personal credit will be used in the decision to extend your business credit for the first time.

However, as your business grows, it’s important better define the line between you and your business. There is a level of protection for your personal finances when they are separate from your business finances.If your business is structured properly, and your finances are separate, a setback for your business doesn’t have to become a setback for your personal financial situation.

A good example of the importance of keeping your personal and business finances separate comes from Robert Kiyosaki, the author of Rich Dad, Poor Dad, and the owner of multiple businesses. When one of his companies announced bankruptcy a couple of years ago, his own personal fortune was protected. Even though one of his businesses had financial issues, the fact that Kiyosaki kept things separate meant that his own individual resources weren’t impacted.

This can even apply in the event of a lawsuit. If someone sues your business, and it is properly organized and legally separate, your personal assets might be protected from the consequences of the litigation. 

The same can be applied to credit. As your business grows and develops its own credit history, you can separate your personal credit from your business. That way, if something happens to your company, and your business credit is tarnished, it won’t have as big an impact on your personal situation. The protection can work both ways; you can protect your business finances to some degree from your personal financial setbacks when you keep your business credit separate.

Consult with a knowledgeable business organization expert, attorney, or accountant as you work toward creating a separate financial profile for your business. 

Better records for your business

Another good reason to keep your business credit separate from your personal credit is for record keeping purposes. If you use your personal credit card to purchase business supplies, it’s harder to show the separation, especially if your business purchases are buried on a receipt with several personal expenses. What happens if you are asked to show documentation during a tax audit, or for some other reason? Using your business credit for business purposes and keeping it separate from your personal financial uses can help you quickly and easily track your expenses.

It can also make record-keeping easier for your own purposes. Keeping track of payroll, business purchases, and other overhead costs is much easier when you have separate accounts for business. You can quickly and easily track spending trends and plan for the future when you maintain separate accounts. 

Build business credit 

Building business credit is often difficult. Initially, you will be required to provide personal information, and you might need to a personal guarantee a business credit or loan. However, once you have your first business credit account, do what you can to build a credit profile for your business. Using your business credit card wisely, and not overdrawing your business checking account, can help boost your business credit reputation.

As your business establishes its separate credit profile, eventually it will be able to get credit without your personal guarantee.

Even if you operate as a sole proprietorship, it can make sense to at least open a business bank account and use it for income, and for business expenses. You can “pay yourself” out of your business account, and that will also create another layer of record-keeping that can serve you well at tax time. 

Even though you feel like you are your business, especially at the start, it’s vital to build those walls,. It makes things easier for you, and it can also provide your personal finances with protection against business catastrophes.

Maintain your credit profile with a good credit score. Visit www.cibilconsultants.com

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