Getting your credit in order
Get to know what impacts your credit so you can plan to grow your business - profitably.
Chapter 5: Credit factors and action steps
You have to make opportunities for your business to grow when you're self-employed. Oftentimes, that means using credit to get on your feet.
Get to know the five factors that determine your credit score in this chapter's enlightening conversation. As in previous chapters, use the Financial Foundation for Freelancers worksheet to help you learn and remember what you can do to improve.
Know your credit
Your credit score is built from five factors:
- Payment history (35%)
- Credit utilization ratio (30%)
- Length of credit history (15%)
- Credit inquiries (10%)
- Credit mix (10%)
This data feeds into a credit report. The report indicates how responsibly you pay your bills and loans. If you have a history of consistently missing payments and you max out your credit cards, you should anticipate a low credit score. On the other hand, if you make your payments on time and you stay under 30% of your credit limits, you'll have a higher credit score
A higher credit score is great. But, if you have a lower score, it's not the end of the world. You may make adjustments to improve your credit relatively quickly
Know what factors into your credit and make a plan to maintain or raise your score
Your chapter 5 checklist:
- Watch the Credit Factors and Action Steps video
- Download the Financial Foundation for Freelancers worksheet
- Check your credit and make a plan to keep/build your credit score