As you continue researching financing options for your business venture, this blog will address some of the things you can do to improve on your credit report. If your situation is different, you really should consult a professional, as this is generic for all.
Review Your Credit Information
The first thing that should be done is a thorough review of your credit report. Go as far as listing all the items you have on the report, on a separate piece of paper. Write down the balances and the last payment date, as well as the payment amount due. Next to each item write the last date you had a contact or there was activity on the credit report. Make sure that you verify that the entries apply to you.
Bad Credit
If you are past due on some of your debts, check the date of the last activity on that debt. Compare those dates to the statute of limitations on debt for your state. If they are past the date accepted, ignore those for now.
For the rest of the debts, here’s what you are going to look for. Review the payment history for late, missed, or otherwise, payments. If one of those creditors is a local vendor, contact their credit department and discuss ways to remove that item from your credit report. You may be able to do this with a few other creditors from out of town, as well. Your best bet is to ask when you have leverage. In other words, when you place a large order with one of these vendors, that’s a good time to ask for those allowances.
As you reviewed your credit history, another area to look for is the balance available. Compare the credit limit on a debt to what you owe on it. The higher the balance available the better off you are. So, attempt or work on reducing the balances on those maxed out items. That alone will increase your credit rating considerably.
The last item on your credit history is to determine how many debts you have that you can pay off. Go through the credit report and try to pay off as many smaller debts as you can but don’t close the accounts. Those balances will definitely help you. That will work towards your capacity and character. This is an area that will not make as great an impact as the one above but will still help.
Once you have gone through the report and made as many corrections as you can, worked on as many debts as you are able to, your next step is to make sure that they show on the report. Request a copy of the report and make sure you get it from all three major reporting agencies. This is critical as often the reporting agency will not be as willing as you might wonder to update your report as quickly as you would like.
One final thought on reviewing your report. Once you have a cleaner credit report, review one more time those debts that you have. This time add all the payments showing on the report and compare that to your income. if you are having to pay more than 30% towards your debts, work on reducing that. Although there are no specific written (or otherwise) rules that say you are good or bad credit risk if you have more than a certain percentage of debt-to-income ratios, it definitely will help you towards showing what your capacity to take on new debt will be. After all, if you are maxed out on how much you can pay out, how much do you think your creditors are going to be willing to lend you any more?
These are just some of the things you can do to improve on your credit situation. We’ll work on others on the next round.
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Tags: bad credit, credit report cleanup, credit report review, debt-to-income, personal credit history, statute of limitations on debt