How to Raise Your Credit Score: Hire a Trusted NJ Attorney

NJ attorney

When hear the word ‘credit’, a number of images may pass through your mind. Maybe you think of a situation in which someone owes you money or perhaps you picture a bank. You may consider your education and the credit you received for each assignment or even a situation at work where you deserved credit for your hard work or a good deed. If you’re involved in the financial world, your mind might immediately jump to credit scores: good credit, bad credit, and everything in between.

No matter what you envision when the conversation turns to ‘credit,’ toss in a bit of everything mentioned above and you’re on your way to completing the puzzle of what’s known as a ‘credit score.’ A credit score is a three-digit number that is computed using an algorithm and is based on information gathered from your credit report. Its purpose is to predict risk. Ultimately, your credit score represents the likelihood that you will neglect your credit obligations in the next 24 months.

Though there are a multitude of credit-scoring models that are utilized, the most well-known is the FICO credit score. According to myFICO.com, 90 percent of all financial institutions throughout the United States use FICO credit scores when making a number of important decisions. The three-digit number ranges anywhere from 350 to 800, with the lower number representing a less-desirable credit score.

How do you avoid ending up with a low credit score? What factors play into the algorithm? There are five categories that influence a credit score. The percentages represent the weight of each factor in determining the score.

·        Payment history (35%): Paying your bills on time is crucial. By not paying your bills by the deadlines, you will cause your credit score to decrease. Also involved in this category are any delinquencies or public records.

·        Amounts owed (30%): The amount that you owe on each of your credit accounts heavily affects your credit score. Also, the amount of possible credit that you have on accounts is strongly considered.

·        Length of credit history (15%): The amount of time and number of accounts you have open will boost your credit score, as long as you’re paying the dues on time.

·        Types of credit used (10%): Having a variety of types of accounts will help you out. Two examples are revolving and installment.

·        New Credit (10%): How often you pursue opening new accounts and new credit, including inquiries (whether you’re approved or not), will have an impact on your score.

Now that you know what goes into a credit score, you realize how malleable it really is. If you don’t give the three-digit number a little bit of TLC, it can quickly bottom out on you. On the other hand, if you are careful with your finances, you shouldn’t have a real issue keeping your credit score in line.

We know that establishing or reestablishing good credit is key to a secure financial future and we want to help you move toward that goal. As you read before, many financial institutions use credit scores and reports to make decisions, manage risk, and increase profits. On the downside, they don’t have any interest in looking out for your personal credit score and overall financial health. That is where Veitengruber Law steps in. Our holistic approach to building credit is at the center of everything that we do. The guidance we provide doesn’t end with a negotiated debt solution or court case. Instead, our goal is to set you up to be a successful financial consumer with well-rounded money smarts.

When your credit score drops following a short sale, a bout with bankruptcy, settlement, or other issue(s), we will walk with you to educate and counsel you. A sturdy financial foundation will give you the power to develop and maintain financial health.

The only way that you will mature in your knowledge of money is to work with experienced professionals. Credit scores and financial health is nothing to mess around with. Your confidence will rest in how well the professional counsels you along this path. With years of experience working successfully within a multitude of situations, we know that we can help you no matter what kind of financial “mess” you may have landed in.

Advertisements

What is a Business Credit Score and How Important is it?

Whether you know it or not, if your business has a business credit card, you also have a credit report. This may be completely new to you, or maybe you’re just trying to find a bit more out about what exactly a business credit score entails. Either way, you’re in the right place, so keep reading!

What is a business credit score?

It’s the key to your business’s financial success. If you’re familiar with a personal credit score, such as a FICO credit score, it’s similar to this. In most cases, it’s a number between 1 and 100 that represents your business’s creditworthiness. Your score tells institutions whether or not they should lend your business money and how much they should be lending. They can also discern how likely you are to repay them in a timely fashion. A higher number on your credit score represents a strong history of taking out loans and repaying them on time.

Why do I need a business credit score?

Most likely, if you’ve just started a business, you’re using your personal credit to get the ball rolling. Using your personal credit indefinitely may not be the best decision for your business. Here are a few examples as to why establishing a business credit score is beneficial:

  • Easier to obtain financing: If you are able to establish a business credit score, it will easier to obtain a loan or line of credit in the future.
  • Potentially lower insurance policy rates: Insurance rates will rise as your business flourishes, but with a superb business credit score, these rates may be lower.
  • Separation of business and personal finances: By creating a credit profile for your business, you’ve added a degree of separation between personal and business finances. This makes it easier to track expenses for the purpose of taxes. Also, you won’t have to worry about personal finances, expenses, and debts intermingling with business finances.
  • Increased borrowing power: Larger amounts of financing may be easier to get if you have a decent business credit profile.

Establishing and growing business credit can reap remarkable benefits and financial advantages for a company. With a notable credit profile, businesses have a better chance at leasing equipment, securing lines of credit, obtaining a company vehicle, and getting a business credit card or loan without compromising personal credit.

Finally, it’s important that you know exactly what affects your credit score.

  • Payment history: Likely the most obvious factor, it’s crucial that you make payments on time and for the correct amounts. A string of late or missed payments will result in a lower credit score.
  • Length of credit history: A well-established line of credit is going to create the best credit score. Even if you have a history of a few missed or late payments, this is better than a short or nonexistent credit history.
  • Company size: Though this may vary, some lenders prefer not to lend to businesses of a certain size.
  • Credit utilization ratio: If you max out on all lines of credit every month, this will send a signal to lenders. Essentially, you want to be aware of how much you owe on current credit lines in relation to their limits.
  • Risk Factors: Some businesses possess risks simply based on their industry. For example, a business located in a town with a low population density may be considered high risk in comparison to a business in a highly populated location.
  • Public Records: Filing for bankruptcy or a history of civil judgments or tax liens against a business have proven detrimental. Since these are public, anyone can view this information.

Like many financial matters, credit scores are constantly changing, some of which is in your control and some is not. By focusing on what you can control and knowing what you can’t, you will be a more effective business owner. A commitment to striving for a great credit score will provide opportunities for improved financing, increased cash flow, and better business breaks.