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The Truth About Small-Business Credit
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Article 2: Get Your Personal Credit In Order
How good is your personal credit? The answer’s important to the health of your enterprise. Many banks and vendors will run a personal credit check before granting business loans or favorable purchasing terms for goods and services.
Personal credit ratings are calculated by three big nationwide consumer credit reporting companies: Experian, Equifax and TransUnion.
“It’s a good practice to look at your own credit report once in awhile to see if there are things out of the ordinary,” suggests Robert S. Bernstein, partner at the Pittsburgh-based Bernstein Law Firm. “Check to see if the reports from creditors are accurate and do some clean up work if there are problems.”
Here’s some good news: You can get copies of your personal credit reports once a year without charge, thanks to the federal Fair Credit Reporting Act (FCRA).
To obtain your free credit report online, go to Annualcreditreport.com, the Web site established by the reporting companies. Once you fill in your personal information, you’ll be automatically redirected to each of the three reporting companies’ Web sites. At each site you can review profiles that describe:
Your revolving credit accounts Your mortgages Recent inquiries about your credit Your bankruptcies Liens or judgments from federal, state or county court Collection actions taken against you
Each site will also offer to provide your current FICO credit score for a fee of between $5 and $9. FICO is calculated separately by each reporting company using software developed by Fair Isaac and Company.
FICO scores are based upon details of your credit and payment history. Scores range from 300 to 850. Those in the 700s and greater are considered good. The median FICO score in the U.S. is 723.
It’s wise to obtain your FICO score, because many creditors look at nothing but that figure when making credit decisions.
You should take steps to correct any errors on your credit report, because they can affect your ability to obtain funds at favorable interest rates. You can correct your errors online.
At TransUnion, for example, you click the “Learn About Correcting Errors,” and then “Submit Dispute.” Later you can come back to the Web site and click “Check Dispute Status” to see what progress has been made.
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