Good credit is one key to securing a loan for anything you want to do — personally or professionally. You’ve likely had your credit score checked before, maybe when buying a car or a home. Now that you’re running a business, though, lenders will be looking at your personal and business credit scores any time you apply for a loan to upgrade equipment, purchase real estate, or make other practice improvements. These scores may be significant in determining the size of the loan you can get approved and the interest rate you will be charged. Here’s how to see what your credit scores looks like — and improve them, if needed.

Check your credit score 

Your credit score is a three-digit number that is assigned by an independent rating company, such as FICO (Fair Isaac Corporation) and VantageScore. These companies use a score range of 300 to 850. The rating is based upon your credit report, which is a detailed summary of your current and past credit accounts, such as credit cards, credit lines, and loans. It also includes how many times you’ve applied for credit, outstanding debt, recent credit activity, and any bankruptcies or tax liens. Higher numbers indicate the borrower is a more favorable credit risk, and lower numbers indicate the borrower is a less favorable credit risk. 

Credit score rating is not a precise art, as each rating company develops its own score range. What’s more, each lender has its own definition of a good or poor credit score. Learn more about the nuances of credit scores and reports here.

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Free credit scores can be obtained from the three major credit bureaus: Equifax, Experian, and TransUnion.

Request a credit report 

Don’t assume your credit reports will be accurate. Monitor them yourself so you can catch any errors (or fraud) and dispute them before they impact your credit score or credit history. 

  • Review your credit reports annually (or more often). You can request a free copy of your personal credit report once per year on AnnualCreditReport.com. (Credit bureaus charge for business reports.)
  • Be sure to request your consumer credit report and your business credit report. Your business credit report will contain a lot of the same information as your consumer credit report but will be specific to your business’s credit track record.

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To stay on top of your numbers, consider accessing a credit report from a different credit bureau every 4 months. Doing this will not affect your credit score. Learn more at AnnualCreditReport.com or on the FTC.gov website.

Improve your payment profile 

Making timely payments is an important way to improve your credit score. In fact, it makes up 35% of your credit score.

  • Prioritize and schedule your monthly payments, making sure to pay at least the minimum balance every month on all your accounts.
  • Consider having your credit card bill paid automatically — on or before the due date. You can do this by setting up a transfer from your bank.

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Ask your lender about setting up email and/or text alerts to remind you of upcoming payments (rent, utilities, etc.) so you’ll be sure nothing gets missed or delayed.

Take a look at your debt load 

Your current debt load makes up to 30% of your credit score. The bank weighs this against your credit worthiness and assets to decide if they feel you can take on additional debt without a struggle. 

  • Stay on top of how much you’ve borrowed against your available credit and make sure to stay within your credit limit — and your budget.
  • Review your credit transactions each month, paying special attention to credit card activity. Make sure you’re not maxing out your credit line (or exceeding it), since this may reflect negatively on your credit report.
  • Take stock of the types of credit accounts you have, including loans, business lines of credit, and credit cards. Having a mix can improve your credit, as this makes up 10% of your score.

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Try to use less than 30% of the credit available to you. Don’t close unused accounts: That extra credit can help you here. So can requesting an extension of credit limits on credit cards or credit lines. (Just be careful not to use that as a license to overspend.)

Contribute to an emergency fund 

An emergency fund may help ensure that you’ll be able to meet your credit obligations and unexpected expenses, if your situation changes. It can also help you avoid wrecking the credit score you worked so hard to build. As a practice owner, you’ll want to have such a fund for your family and your business. 

  • Talk with your accountant about how much you should have in your emergency fund (for both business and personal purposes). Often, it’s enough to cover 3 to 6 months’ worth of expenses.
  • Make sure this money is easy to access so you won’t get penalized if you need to tap into it fast. CDs and IRAs, as well as real estate and certain types of equity, all can be difficult to access, so they’re not a good fit here.

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Consider setting up recurring transfers into a savings account until you meet your emergency fund goals.

By learning more about what lenders look for in your credit report — and taking the steps to build and maintain a positive credit score, both personally and professionally — you can increase your chances of securing the financing you need to make improvements to your practice.