Monitoring your credit is a good way to be responsible about your finances.  Higher scores and a report without delinquent accounts can help keep your interest rates lower.  Reviewing your score and boosting it by paying off bad accounts can help you get the loan you are looking for.

For a small business that is just beginning and has no payment/credit history, first accounts taken out in the business’ name will have to be gauged from your personal credit.  Without any business history, the bank needs to use your personal history to make sure you are be reliable and likely to pay back the money you or the business borrows.  You credit report shows the bank a summary of your borrowing and repayment history.

Once the business develops its own history, your personal information is still important for the business.  While the business will be able to utilize its own history as it has been built for the last year or two, the bank will use the credit of the person managing or owning the business to determine credit worthiness.  In the past, a business would be able to get funding based on the business credit history.  However, in today’s tight lending market, banks almost always require a personal guarantee.  That means your personal credit matters for your business.

That said, it is important to remember that each year you are entitled to a free credit report.  Did you know US law allows you to access a free credit report from each of the three bureaus each year?

From Annualcreditreport.com you can pull a credit report.  It is the only government authorized source for users to access. You choose which credit bureau you pull your report from via this site.

Credit Report vs. Credit Score

Your credit report shows you a list of past and current accounts that are under your social security number.  Your credit score is a number that represents this information and can be a different from each agency.  You will get the information from the report, but not the score itself.  Each bureau report can only be accessed once a year.  In order to see it more often pull from a different bureau every four months if you want to keep tight track of your report.

Understanding the 3 bureaus, How to read each Report: 

• Experian: Delinquent accounts are listed first, followed by accounts in good standing.  Both are alphabetical.  *At the top left hand of an Experian report it will give you a credit report number.  You can log in to Experian.com at any time to see an updated report. Keep that number.
• TransUnion: Reports read by newest to oldest account in different categories: first are installment accounts (mortgages, auto loans) followed by revolving accounts (credit cards, store cards). Your delinquent or current accounts are throughout this report.
• Equifax: Reads exactly the same as a TransUnion report.  Be sure to carefully read through these two bureaus to manage payment of any delinquent accounts.

It is a good idea to save the credit reports each time you get them.  Be careful as you go through the process, as the sites try to sell you upgrades of items you don’t need.  You have to sign up to see your credit scores, but overall seeing the report will help you become more savvy about keeping up on your accounts and your credit.

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