What is considered a good credit score?
Credit counseling can help you improve both your business and personal credit. Before you get started, though, it helps to know where you stand. The most common personal credit score is your FICO Score. FICO Scores are classified by the following grading system:
- 300 to 579: Very Poor
- 580 to 669: Fair
- 670 to 739: Good
- 740 to 799: Very Good
- 800 to 850: Excellent
If your personal credit score is below 670, which is the lowest grade of a ‘Good’ rating, it can negatively impact your chances of being approved for a business credit card.
Business credit scores use a different scoring model, however. Although each company uses its own scoring system, they are often assessed on a 1 to 100 scale. This scale is similar to the one used for personal credit grades; the closer to 100 you are, the better. As a general note, you may want a plan to fix business credit if your business credit score is below 75.
What factors impact your credit score?
A credit repair company, such as BDF, will help you improve your business and personal credit scores by addressing the factors that impact your ratings. Although each scoring system is different, in general, both types of credit scores are impacted by:
- Your payment history – Your payment history refers to when – or if – you had a late or missed payment on a credit card or an installment loan. An occasional missed payment will not significantly damage your credit, but a series of missed payments can considerably impact your credit. A credit repair service will typically recommend bringing accounts up-to-date, and maintaining a good payment history moving forward.
- Your credit utilization – This refers to how much of your available credit is being utilized. For example, if you have a business credit card with a $10,000 limit and you are carrying a balance of $8,000, you are utilizing 80 percent of your available credit. High credit utilization will negatively impact your credit score.
- Credit inquiries – When you apply for a loan or a credit card, creditors will perform a credit inquiry to find out your current credit score. This is called a “hard” inquiry. A credit restoration service may pull your credit, as well, but this is a “soft” inquiry. Hard inquiries hurt your credit score, because they indicate that you are attempting to access new lines of credit, and new accounts are likelier to have late or missed payments than well-established accounts. Note that if you are rate shopping with several lenders for one loan, such as a car loan, those hard inquiries will only count as one inquiry, for scoring purposes.
- Negative items – This is an area that many credit repair services address to rebuild business credit, as well as personal credit. These negative items include accounts associated with collections, bankruptcies, liens and judgments. The amount of outstanding judgments, liens and bankruptcies can also negatively impact your credit scores.
Addressing these areas and improving your personal and business credit scores takes time and persistence. It can be overwhelming to sort through all your credit reports and formulate a plan that will make a noticeable difference. That is where our experienced BDF advisors can help.
How can BDF advisors help improve your business credit score?
Effective credit restoration is one of the main goals of our skilled BDF advisory team. We start with a FREE consultation to get to know your business and you. Next, we strategize on how to improve your business score. With the assistance of our federally licensed, highly experienced business credit attorney team, we look for errors on your credit reports that we can address, negative items that we can remove and new lines of credit that may improve your credit utilization.
Once we have reached a mutually agreed-upon plan, we move forward with implementation. We help you deal with stressful items that are hurting your business credit score, such as liens and judgments. We assist you in settling accounts in collections. We guide you toward funding options that set you up for business success, rather than failure!
Keep in mind that a bad business credit score can limit your funding options. You may be declined for much-needed funding, or you may only qualify for short-term loans with high interest rates, or secured loans that require you to put up your personal or business property as collateral.
If your personal or business credit is keeping you from securing the funding you need, and the favorable terms you deserve, we can help. Contact BusinessDebtFree.org to get started with a FREE consultation today!