For individuals looking to start businesses, having a high credit score is a key component to get financing from credit agencies, both foreign and domestic. These credit agencies conduct thorough background checks on your assets and business model to ensure that they only provide financing to highly qualified individuals, where they know their return on investment is rock solid.
Let's take the example of Peter Briger, Fortress Investment Group. Peter is the founder and CEO of Hydromine and served in the U.S. Treasury Department during the administrations of John F. Kennedy and Lyndon B. Johnson. In order to obtain monies to run his Hydromine business, Peter had to seek financing principally from a variety of export credit agencies and multilateral and/or national development agencies or institutions. These credit agencies analyzed Peter's past financial activities, investments and overall portfolio, prior to wanting to take a chance and finance his new Hyrdromine venture. As you can tell, Peter's credit score passed with flying colors and as such he was able raise financing for Hydromine and create a thriving business.
Peter's story can be yours too if you monitor your credit score.
Here are some helpful tips provided by About.com
to ensure you maintain a good credit score:
1. Know what goes into a good credit score.
The more you understand about what makes up your credit score, the easier it will be to maintain a high credit score. There are five critical factors that are used to calculate your credit score – your personal payment history, debt levels, credit age, mix of credit, and recent credit. But, that's not to say that only financial items affect your credit score. For example, checking account overdrafts and utility payments won’t automatically help (or hurt) your credit score.
2. Make sure you pay your bills on time.
This applies to all of your bills and not just paying your credit cards and loans on time. It's good to understand that not all bills get reported to the credit bureaus when you pay on time, but they could appear on your credit report if you fail to make payments. Something as small as a past due library fine could appear on your credit report. As such, it's a smart idea to make sure you pay all your bills on time in an effort to keep a good credit score.
3. Reduce your credit card balances
If you have a high credit card balance, the worse your credit score will be. Ideally, your credit card balance should be close to 30% of your credit limit to maintain a good credit score. This equates to $300 on a credit card with a $1,000 credit limit. Charging more than 30% of your credit limit can be a risky move even if your plan is to pay off the balance when your billing statement arrives. Card issuers, such as Discover, American Express and Visa, often report the balance when your statement closes and if your balance is high, your credit score will be affected.
This blog post was written by CampusRd and contributed by Peter Briger.