Your credit score plays an important role in your business’ financial future and is an important aspect of your financial profile. Strong and excellent credit score helps you to qualify for business loans with low interest rates and favorable terms. The higher your credit score is, the less risky you are to your lenders. Your credit score is one of the three key factors that determine your overall financial health.
According to FICO research, the average US FICO Score has now hit 704, showing a steady upward trend in US credit value. However still there are some small business owners who are experiencing credit difficulties.
Credit score is a three-digit number that reflects your creditworthiness as a borrower. There are plenty of credit scoring models out there, but FICO is the most preferred one. According to the myFICO.com, almost 90% of financial institutions in the US use FICO scoring model in their decision making process.
Good and Bad Credit Score
As per the FICO scoring model, the credit scores ranges from 300 to 850.
There are lots of factors that goes into your credit score, but here are five major factors that make up a FICO score.
Normally credit bureaus collect financial data from scoring agencies. Credit card providers, banks, and lenders share their customer’s credit behavior to credit reporting agencies, which is then complied in credit reports. Lenders whom you worked with and have a trade line, report your credit activity to the credit bureaus. Normally your credit activities include, your account status and details, balance, due and paid amounts. And, whenever you apply for credit a lender requests your credit report from a credit bureau.
Why Your Credit Score Matters?
When you apply for phone service, loan or insurance, the service providers need to know if you’re a good risk for them. They verify this by evaluating your credit report. Having good credit can provide you with lots of benefits. A bad credit score can bring lots of effects to your personal as well as your business life, which include, rejection on loan, and other opportunities.
Lenders pull your credit information from your credit report, such as your overall repayment history, how long you’ve had your accounts, your outstanding debt, and other collection actions. A credit scoring system rewards you points for each factor.
How You Can Improve Your Bad Credit Score?
It is important to note that there is no quick way to fix your credit overnight. In fact, quick fix strategies for credit improvement can lead you to more trouble. Therefore avoid any strategies that offer quick-fix credit improvement. Checkout some of the best ways to help you improve your bad credit score.
To learn more about credit score and how to improve it, call us today at our toll free number (833) 827-4412. Alternatively, get contacted with one of our representative by filling our online application form.