This is part of a series of blogs created by Advantage+ to help small business owners manage their companies and have fun doing it.

It’s Personal

You’re running a business. So why should you give a rip about your personal credit reports?

By Larry Elton, Advantage+ chief executive officer

Most lenders consider your personal credit score a measure of character and creditworthiness—of you and your business. So if your score stinks, credit will be tough to get and cost more when you get it. And it takes years to mend bad credit scores.

But don’t give up—if your credit score is good, you can make it better; and if it’s bad, you can make it good.

Credit scores range from about 300 (despicable) to 850 (fantastic). The three main credit-reporting agencies each have their own mystic formulas to determine scores. But, approximately 35% is determined by payment history, 30% by amounts owed, 8% by length of history, 12% by number of new accounts, and 15% by type of credit used.

Here’s how to improve your scores:

  •  At least once a year get a credit report (they’re free) from each major agency:



Trans Union:

  •  Scrutinize the reports. If you see incorrect information, contact the reporting creditor, and request corrections (they’re legally required to make them).
  •  Make loan payments on time, and in the correct amounts.
  • Use credit cards sparingly, keeping amounts borrowed less than 30% of credit limits.
  •  If you have trouble making a scheduled payment, contact your creditor to make repayment arrangements, before you’re delinquent.
  • If you are shopping rates or terms for a particular purpose, do it over a short time frame, so reporting agencies will consider it as only one “hit” on your credit record.
  • Avoid credit repair clinics and services. There are no shortcuts. Accurate and timely negative information cannot be removed from your credit file. So your best approach is to handle your credit responsibly over time.

Credit reports have become more accurate and complete. This has prompted many lenders to develop cookie-cutter underwriting that’s based solely on credit reports and scores instead of traditional underwriting. Traditional underwriters consider credit scores too, but also evaluate the unique characteristics and management of each business. The cookie-cutter method may work for you, but you’ll likely get better terms and a growing relationship with a lender that considers the whole shebang.

Are you befuddled by the world of small-business loans? I’m here to help. To share your comments and ideas for future blogs, send an email to or call me at 1-800-949-7040.