Credit Score IQ

So many factors affect your credit score, and figuring out how to boost your score can get pretty complicated. It takes more than on-time payments to build your score, and our Credit Score IQ resources can help you understand how to make the credit changes you need. To view your credit report for free, visit our partner Nav.com/sbm

Your credit score is an important part of your loan application. But it takes more than on-time payments to build a good credit score. Five factors help explain how credit agencies evaluate the information in your credit reports when calculating your personal credit score. The better your score on each of these factors, the higher your overall credit score. These five main factors include:

As you navigate business financing, it may be tempting to use your personal finances to help out when your business needs a boost, but that is not always the best solution in the long run. Separating your personal and business finances can help ensure you treat your business like the independent entity it is, while safeguarding your personal finances.

For many businesses, credit cards are an essential part of your business activities. They can help you build your credit and obtain the assets you need to properly run your business. Unfortunately, bad or non-existent credit may make it difficult to be approved for a credit card. If you are looking to establish or rebuild your credit, a secured credit card can represent a viable option.

Your payment history outlines whether you pay bills on time and is the single most important factor in your personal credit score.

After payment history, your overall debt is the second most important factor in your credit reports. When thinking about your debt in relation to your credit score, you might focus on the total amount of debt you owe. But credit scoring models often work somewhat differently.

Paying your balance off in full doesn’t necessarily guarantee a low debt usage ratio, because in many cases your balance will be reported before, not after, you make a payment. In the case of credit cards, for example, many issuers will report your balance at the end of the billing cycle, when they generate the statement. So let’s say your billing cycle for a credit card ends on January 20th.

Whenever a company or individual accesses your personal credit reports or scores, the credit reporting agency that fulfilled that request must, by law, record that “inquiry” on your credit report. Because certain inquiries have been found to be associated with greater credit risk, they may affect your credit scores.

The best way to address a thin credit file is to actively develop credit. The easiest way to build your credit is to use credit cards. However, without a credit score, you will likely have a hard time getting approved for a typical credit card. In that case, a secured credit card can help you establish credit when you don’t have any.

Figuring out how to access business financing and credit is a common quest for both new and existing small business owners. From start-up costs to new expansion strategies, establishing a strong business credit profile with diverse accounts can help you achieve your immediate and future business plans.

Picture this: You pay your bills on time, you don’t have any credit card debt, and overall, you consider yourself fairly responsible when it comes to spending. You’re ready to apply for a credit card or loan to help you get your future business off the ground, and all of a sudden, you hit a road block. Your request is denied and, upon further research, you find that you have a “thin credit file.”