Let’s be honest; it’s not uncommon for business owners to have personal finances which are in the toilet. It’s tough to start a business, no matter who you are.
If you are like most people, you weren’t independently wealthy when you started your business. Your new company was a big risk. It probably still is.
In the early days of a new business, entrepreneurs have to spend incredible amounts of time and energy on their big idea in order to have it take hold in the real world. During this time, it’s common for other aspects of life to suffer as a result: including personal credit health.
If your credit score took a dive as a result of the change that a new business made in your life, it’s important to know that you can make up the difference. It will take some work and a new habits, but you’ll get there.
Let’s get right into it. Here’s how to start improving your credit score.
1. Identify the problem
First let’s identify the problem. A credit score can tumble for a lot of reasons. Some of the most important are 1) unpaid debt, 2) late payments, 3) and overuse of credit. New business owners are notorious for hitting these three categories, often because they’re busy, stressed, or spread too thin to do otherwise.
- Unpaid Debt. This is a big one. If your business’s finances are totally separated from your personal finances, this shouldn’t affect you (unless you aren’t paying your debts in your private life). But sometimes new businesses use private funds to build the business. If the business suffers, the business owner may not have the personal means to pay all of these debts. All of this could come together and crush the owner’s credit. If something like this happens to you, you’ve got to pay the debts, or otherwise wait the seven years for them to disappear from your record.
- Late Payments. Late payments won’t hurt you as much as non payment. Credit card payments are the biggest factor for most people. If a payment goes unpaid for a couple of days, it likely won’t make a negative difference. But if it goes unpaid for a couple of weeks, and especially if the unpaid account hits 30 or 60 days, this will have a big impact on your credit score. If you can’t make all of your payments, pay the ones that are the longest overdue.
- Overuse of Credit. If you apply for too much credit, or you use more than about 30% of your available credit limit on any account, this will pull down your credit score.
2. Fix it!
If you can make the payments for these problems and otherwise correct the issues at hand, you can then start doing the work of scrubbing your formal record of these negative items. You’ll see negative items on your credit reports, as well as the option to “dispute” the items.
If you dispute after having resolved the issue on your end, it’ll go away. In some cases, it’ll go away even if you haven’t corrected the problem. In this case, though, you’ll be running the risk of reminding a lender that you exist and that you still owe them money. Check out this helpful creditrepair.com review for more.