Boosting Your Credit Foxboro MA
5 Tips for Boosting Your Credit
It is not necessary to have a great credit score in order to be a successful investor, but it certainly helps. Those with higher credit scores are rewarded with lower rates when borrowing money, for example, among other things.
But consumers with average or low credit scores often don't know what they need to do to improve their scores, and many do nothing as a result.
"Most people don't try to restore their credit, they just wait until it gets cleaned on its own," Joe Crump, real estate investor and author of How to Clean Your Credit in 60 Days, said. "They need to actually do something."
Further, as of last month, the way credit scores are reported is changing: Authorized users will no longer have the credit histories of the accounts for which they're authorized users applied to their scores. Experian began using the new credit scoring system last month, while TransUnion and Equifax will begin using the new system next year.
Using business credit offers some leverage and asset protection People with limited credit histories on their own, who are taking advantage of the benefits of being an authorized user, could see their scores drop significantly as a result. (For more information on the new credit scoring system, see Credit Boom Turned Credit Bust .)
Below, then, are the top five tips that can benefit everyone looking to boost their credit score:
1) Using business credit:
This is an option available to active investors or those who are self-employed, though many remain unaware of its availability to them.
Using a line of business credit "allows investors to get credit that doesn't show up on their credit report," Swanberg said. Those interested in pursuing business credit should "shop online or ask their banker," she said.
Consumers can also benefit from keeping balances, if they have any, on their business credit lines rather than their personal ones. Business credit lines do not affect personal credit scores.
One way for consumers to take advantage of business credit is through setting up a company—most likely an LLC or corporation—through which to handle their investments. This strategy offers consumers leverage through business lines of credit and the potential for some asset protection. "With a sole proprietorship or partnership, your personal credit information could be included on your business credit report—and vice-versa," according to Entrepreneur.com.
In addition, "At some point, almost every business needs some type of credit," according to Entrepreneur.com. "To avoid having to use your personal credit history or guarantees and to obtain the best possible terms, start the steps necessary to build a business credit profile…before you really need it."
2) Percentage of credit used:
The ratio of credit used to available credit is a key factor in a credit score. The closer a person is to using all their av...