Credit cards are invaluable resources in the modern age. They provide your business with financing to cover short-term expenses, big-ticket purchases, or to simply assist with cash flow. When managed properly, credit cards are useful tools in your business resource kit. Managing credit is your #1 priority with all lines of credit. We will delve into the 5 most important things to remember about effective credit card management.
- Protect Your Credit Score – your credit score is a three-digit number used by lenders, creditors, insurance companies, banks, and other institutions to evaluate your credit worthiness. More importantly, your credit score acts as a reflection of your character. A person, or business, that stays on top of payments and obligations is typically associated with a good credit score. The implications of maintaining a good credit score are evident in the improved interest rates you will receive from lenders, the positive feedback you will generate from your supply chain, and general affability from clients. Many financial consultants argue that the three most important numbers in a person’s life are their credit score, their blood pressure, and their weight.
- Boost Individual Components of Your Credit Score – 5 factors determine a person’s credit score. These include the type of credit you have, how many different credit lines you’ve applied for, the length of your credit history, your repayment history, and your available credit/how much debt you have. By systematically improving each one of these categories, you will see your credit score rising over time. There are 3 credit bureaus in the United States including Equifax, TransUnion, and Experian. Slight variations in the calculation of credit scores exist between these bureaus, but most US credit scores are determined by FICO (Fair Isaacs Corporation).
- Obtain a Free Copy of Your Credit Report – many folks in the US are blithely unaware that it is possible to obtain a free copy of your credit report every year from each of the three credit bureaus (Equifax, TransUnion and Experian). US law mandates that 1 free credit report be provided upon request per year from these bureaus. Too many people fail to check their credit reports on a regular basis which may result in ending up missing important details, errors, or omissions in their credit profile.
- Apply for the Right Credit Card - a credit card is a credit card, right? Wrong! Each credit card is different with varying APRs, rewards, benefits, annual membership fees etc. Ideally, the best credit cards are those which maximize your expenditure with the best possible rewards. According to experts from CreditLoan.com - things like frequent flyer miles, hotel stays, high percentage cashback, low annual fees, zero or low APRs, and easy balance transfers are vital aspects for consideration. It is worth your while shopping around for the level-best credit card for your business or personal needs. It is difficult to scour the literature in search of comparative analysis on individual credit cards on a one by one basis. Credit aggregator services are a great place to start your search for the top-ranked credit cards.
Know Your Credit Score – for folks who are unaware of their credit score, this is a number you should immediately get familiar with. Low credit scores are typically below 600. Poor credit ranges from 600 through 649, fair credit ranges from 650 through 699, good credit ranges from 700 through 749, and excellent credit is any figure higher than 750. The higher your credit score, the better access you will have to low interest loans, quick approvals, and a favourable commendation from companies, customers and suppliers.