How a Good Fico Score Impacts Business Fundability

One of the benefits to building a creditworthy company is that lenders, creditors and suppliers will determine the level of credit risk based on the company’s creditworthiness rather than that of the owners.

However, there are instances where a lender will require a personal credit check as part of the overall risk assessment. In these cases, it is in the best interest of you, the business owner, to have a positive credit rating with the consumer credit agencies.

If credit scores currently fall below 680, then focus on taking positive steps to improving those numbers.

With good fico scores, you have a much greater selection of funding options to choose from. Even if a lender is allowed to check a credit rating, once approved, the creditor may only report the debt and payment history to the company’s credit files – not the files of the owners.

If you decide to apply for business credit with a lender who requires a personal credit check, you should know what the scores are beforehand.

FICO is the most widely used credit scoring system in the world. The majority of lenders will use this system to obtain scores to determine the credit risk of an individual. Each score is based on the information that each consumer credit agency keeps on record.

First, you should visit the MyFico website and determine his Transunion and Equifax credit scores. They will provide a detailed explanation on the positive and negative factors affecting the scores.

Secondly, order the credit score from Experian at the main website. Currently, Experian offers a credit report and credit score that includes a breakdown of factors that raise and lower scores.

Once you receive your scores and reports, you should look for any errors, inaccuracies or outdated information. If any questionable items are uncovered with any of the reports, then initiate a dispute n immediately with the agency containing the errors.

• For Equifax – Go to Equifax.com and click on the “Dispute Errors on My Report” text link. You can initiate a dispute online, but you will need to supply a confirmation number that can be found on your Equifax credit report.
• For Transunion - Go to Transunion.com and click on the “Credit Disputes, Alerts & Freezes” tab. You will need to create an account first, but once you log in you will be able to initiate a dispute, check your dispute status and trigger a credit freeze if needed.
• For Experian – Go to Experian.com and click on the “Disputes” text link located at the bottom of the page. You will need a report number that can be found on your Experian credit report. On this site, you can start a new dispute, check the status of an existing dispute and view results of a completed dispute.

It is vital to monitor personal credit and ensure all information being reported is accurate and up to date. Just one mistake can impact credit scores and cost hundreds, if not thousands, of dollars in additional payments and interest that a business owner should not be paying.

About the Author

Marco Carbajo is CEO of the Business Credit Insiders Circle (www.businesscreditblogger.com), a step-by-step business credit building system providing lines of credit, trade credit and funding sources.