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Firstly, find out what is on your credit report. There are currently
three credit bureaus, Experian, Equifax, and Transunion. Order a 3 bureau
credit report to get the overall picture of your credit history. A FICO
score will also give you a summary of how credit worthy you are. An
excellent score is about 700, a 680 is around average. Anything lower then
620 will badly damage your loan application.
There are things you can do immediately to clean up your credit score.
- Pay all your installment loans, and credit cards on time, even if you
are just paying the minimum amount due.
- Set up your bank account to auto pay the minimum, so you will never pay a late
fee again.
- Do not open any new accounts for six months.
- Do not close credit card accounts if you revolve on balances.
Lenders look at your available credit ratio to amount borrowed.
- Pay more then minimum and lower the amount owed. Pay it off for
your sake, as well as your credit rating.
- Do not file bankruptcy!
If you make $30,000 a year, and your credit card debt is $30,000, you are
effectively bankrupt. Stop right here, and consult a bankruptcy expert.
It will be virtually impossible for you to repay your debt, without severe
hardship. Before starting your business venture, pay down your debt.
You don't want to worry about paying off your student loans while you worrying
about paying your staff.
If you applying for a loan, you should be aware of how the loan will impact
your credit rating. If the loan amount is far more then you can afford to
pay, it will impact your rating negatively. If you miss a payment on an
installment loan, this will be viewed more negatively then missing a credit card
payment.
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