Ways to Repair Your Personal Credit File Before Going Into Business for Yourself

Jun 7, 2016 by

Most aspiring business owners can’t wait for the day that they are able to pull out their business credit cards and be able to say that they’ve got lunch covered. Being in business for yourself shows that you are responsible, capable, and self sufficient, but you can have trouble starting up if your personal credit rating is down the tubes. Despite the fact that personal and business credit ratings are kept separate, your personal credit history is going to be looked at closely in the beginning.

Since your business will be new and you won’t have several years of tax returns to prove your earning ability, creditors will defer to your personal credit file. One question you should have answered before you embark on creating a business credit portfolio is how to get a late payment removed from your credit report. Making an effort to remove all problems from your personal credit history will allow you to see a steep improvement in your overall credit score.

Review All Hard Copies of Your Personal Credit History

There are only a few different proven ways to increase your personal credit score fast, and you have to be completely decided about the process in order to see a big difference in your credit. First, you need to know both what your credit scores are as well as what is being reported in your credit history.

Knowing your personal credit score can help you to gauge how healthy your credit is overall, but it won’t reveal how many late payments have been reported, collections, defaults, or even what type of credit you have. You can contact all of the major credit reporting agencies, including those that aren’t normally checked by consumers for this information. There are credit reporting agencies that focus on utilities and even judgements, so be certain that you get physical paper copies of all of your credit reports prior to starting any repairs.

Talk to a Personal Credit Repair Specialist

You may know how to get a late payment removed from your credit report by calling your cell phone carrier and making the request as a courtesy. This approach might lead to limited success when it comes to contacting creditors that you still have open lines of credit in good standing with, but not all other changes will be quite so easy.

Credit repair specialists don’t just know what can be done to help improve your personal credit history through practice, they also have good working relationships with most major creditors. Imagine working with someone who has a direct phone number to decision makers at major credit card companies, mortgage lenders and auto financers. While repairing your credit on your own will require lots of certified letters and time spent on hold, a credit repair agency can get more of that same time consuming work done in a near instant.

Diversify the Types of Credit That AppearOn Your Reports

Many people end up harming their credit histories by taking out too many credit cards and then charging them to the maximum upper limit. You could also have a poor credit history because there isn’t a big enough variety. For instance, having only student loans and credit cards can indicate to a business creditor that you are struggling to satisfy your monthly bills. Applying for a small auto loan and then paying it off will not only increase your personal credit score, it can also help to make you look more financially capable.

If you notice that certain creditors that you have a good payment history with aren’t appearing when you inquire about your credit, you should ask them to start reporting. Having just one new creditor appear on your credit reports can help you greatly in establishing a business credit file.

Improve Your Debt to Income Ratio

If you are going to go into business for yourself, you should be able to handle all of the bills that you have now, while being able to put away some of your income in a retirement account. All business creditors look at debt to income ratios, so if your intention is to get a business loan you should have a low debt to income ratio. What this means is that your recorded income should be significantly higher than any debts you owe or any revolving lines of credit you have opened in your name.

In short, owning a home and having a few different credit cards can be helpful when improving personal credit, but there is a balance that you have to maintain. Pay down any credit card balances that you currently owe and keep on driving your existing vehicle if it is dependable rather than financing a new car loan. These moves will help boost your personal credit score up and improve your debt to income ratio to within a reasonable range.

Use Credit Reporting Disputes to Your Advantage

When any portion of a personal credit file is disputed, the entity responsible for reporting this information has to respond. In the interim, the said entry will be marked as disputed and you can start to look at other areas of your credit history that need to be investigated further. Sometimes disputed personal credit file entries result in a higher score, and other times they come back as verified. Use credit file disputes responsibly, but never be afraid to ask for more information, especially if you feel that the information being reported is not accurate. Realize that after you dispute something on your credit report, there is a 30 day window in which the reporting entity has to provide proof of what is being reported.

Business owners that start off with solid personal credit histories are able to grow their companies with confidence. Potential creditors will be more likely to push your applications through, and you won’t likely need to supply as much background information about your business when you have a good personal credit score to fall back on. Ensure that you don’t have any inaccurate problems listed on your personal credit report, remove all erroneous late payments and start paying off your debt to help secure your business future.

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