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Three Steps to Starting Your New Business With a Clean Credit

Article:

For many people, starting their own business is a personal

dream. Before fulfilling your personal dream, it's necessary to

get your personal finances in order. At this early stage you'll

be using your own personal finances to start your business and

if you want to succeed you must approach your personal finances

with a professional eye.

Avoid funding start-up expenses via credit and running up huge

credit card debt. Instead you should apply for a business loan,

which has the benefit of being a one-time loan with typically

lower interest rates than a credit card. However, in order to

get good terms on your loan, you will have to have your credit

card debt in order first.

Without an established business credit history, lenders will

have to look to your personal credit to negotiate your terms.

You don't want personal credit problems starting your business

credit off on a bad foot.

Three Steps to Starting Your New Business With a Clean Credit

Score

A clean credit score will help you get the low interest rates

you need to start your business on solid financial ground.

Step One. Pay off your credit card debt.

Once you know where your credit weaknesses lie, zero in on them

to start improving your standing. Your goal will be to

completely eliminate all credit card debt. It may seem like an

insurmountable task, but in reality, paying it off as fast as

you can is actually easier and less expensive than paying it off

over a period of many years.

First, start paying double the monthly minimum on the balance

with the highest interest rate, while paying the minimum monthly

due on everything else. By paying down that highest-interest

balance, you will save yourself from potentially spending

thousands extra in interest - and you'll be done in half the

time. Once you have paid off that balance, move on to the one

with the next highest interest, and so on down the line.

Eventually you will enjoy the freedom of zero credit card debt.

In fact, if you find yourself having a hard time staying away

from credit card purchases - take them out of your wallet and

bury them in your closet until you have improved your financial

situation.

Step Two. Check your credit report.

Have you seen your credit report? You can get a copy of yours by

visiting http://www.freecreditreport.com. Look over it carefully

to make sure there are no mistakes that could have negative

effects on your credit and your interest rate.

If you find any mistakes, you may dispute them through the

credit-reporting agency. The creditor then has 30 days in which

to respond to your dispute. If they fail to respond within 30

days, the disputed information is expunged. If it is a

particularly old debt, creditors may not even bother to respond.

Disputing credit report mistakes is definitely worth a try since

you have nothing to lose but bad credit.

Step Three. Pay bills on time.

Your credit is not based solely on your ability to pay off your

credit card debt. You must also demonstrate that you are

responsible when paying your bills: utility bills, car payments,

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and rent for example. Try to pay all of these on time and in

full and it will reflect well on your credit report. If you have

trouble remembering to pay your bills on time, try to keep them

all in a highly visible place so you will have a constant

reminder to pay them.

Many utility bills may be paid online these days, so you can

simply check with your utility companies to set up automatic

payments. Not only do you maintain good credit by paying on

time, but you also avoid paying late fees, and saving money is

always a wise financial move!

Before you establish your own business, it is imperative that

you begin with a clean slate: no debt, healthy credit, and

responsible financial habits. When you have a good credit score

to begin with, your business will have a stronger start and will

be easier to run. Good finances mean success. Best of luck with

your new business venture!

© 2005-2006 DebtGuru.com®. This article may be freely

distributed as long as the signature file and active link are

included.

About the author:

Michael G. Peterson is the Vice President of American Credit

Foundation, an IRS 501 (c)(3) non-profit consumer credit

counseling organization that has assisted thousands of

individuals and families with their financial situations through

seminars, education, counseling services, and, debt management

plans. For more information, and free consumer resources visit

http://www.debtguru.com