As a small business owner, your personal credit history is a major factor that will help to determine whether or not you are able to access finance.
We have compiled a list of tips and techniques you can use to repair and protect your personal credit history:
You should check your business’ credit report regularly. You cannot improve or protect your report unless you are aware of what is in it, and of changes to it. You can do this using a service called Noddle, a part of the Callcredit Information Group, which provides free access to your credit report for life.
When you read your report you may find errors. It is reasonably common, for example, for individuals to be erroneously connected with previous tenants at their address. It is important that you have these errors corrected, by writing to the relevant institution and to each of the major credit reference agencies.
Spread out your loan applications
A flurry of applications within a short period of time can indicate a series of rejections, and is likely to be treated with suspicion by potential lenders. Where possible, try to spread out your applications, ideally ensuring that they occur several months apart.
Pay your bills on time
Payment history is one of the most important factors determining your perceived creditworthiness. It is absolutely vital that you make payments on existing credit lines on time. Set up direct debits or standing orders to ensure that you don’t forget.
Don’t ‘max out’ your current credit
Finally, many lenders look at the amount you are currently using as a proportion of your total available credit. Generally speaking, the lower the figure the better. Some commentators suggest that you should try to use no more than 30 per cent of your available credit, although it is important to remember that lenders do not publish their lending criteria, and each will be different.