Tips to Improve your Credit Score

In this new economy, where credit is tight and the banks just aren’t lending, it’s more important than ever to ensure you have your financial house in order. Expanding a medical practice, opening a medical spa, or any new business is going to be capital intensive. Remember the old adage, “it’ll take twice as long and cost twice as much.”  In the past many people banked on using their home equity lines as a financing source, but these are no longer available.

You are also going to need to have access to other methods of financing (i.e. working capital, equipment leasing, leasehold improvements). These all have one thing in common, they all want to know your credit bureau rating.

Credit Bureau Ratings

Every type of financing starts with your credit bureau score. There are three bureaus that maintain a score for everyone, and it’s important that you check all three of them. We’ve seen differences of 100 points between two credit bureaus, and that can mean the difference between an approval and a decline.

Top 3 Credit Bureaus:

1.    Equifax
2.    Experian
3.    TransUnion

Thanks to a 2004 federal law everyone is entitled to one free credit report from each of the main credit reporting agencies once per year. Accessing these reports does not affect your credit rating.

What score are you looking for?  Over 650. If any of the scores are less than 650, you need to contact the bureau and find out why. It could be because of a previous bankruptcy, foreclosure, too many late payments, etc.. But it could also be an error. Having lower than a 650 credit score will cost you a significant amount of money, since your interest rate could be double that of someone with 650 or higher!

Top 3 Tips for Improving your Credit Score

1. Review all three credit bureau reports (contact information below). You should do this every year to make sure there are not any errors.  If you find an error, contact the bureau immediately, because it can take some time to get it removed (could be several months!). Please note, if you contact the bureaus directly, your inquiry will not affect our credit score.
2. Pay your bills on time!  Make sure you make at least the minimum payment on time each month. Being consistently late is a red flag for creditors.
3. Don’t cancel credit cards you don’t use, because this will reduce your available credit and thus lower your credit score. On the flip side, don’t go getting new credit cards to get more credit, that will also lower your score.

Jeff Russell

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