4 Ways you’re Hurting your Shot at becoming a Franchise Owner
Mistakes that hurt your credit score:
Lending has made its (almost full) return. Loans are becoming more available, and all in time for you to start your own franchise business. Hold on, there’s more. Before the bank gives you a stamp of approval for a small business loan, they’re going to be examining your credit score, and it better reflect some smart decisions on your part. Avoid these 4 simple credit mistakes:
1. Thinking your credit card limit is your actual limit.
The bank won’t tell you this, but it’s better for your credit score if your credit card balance stays between 20-25% of your max limit. A high percentage could disqualify you for certain small business funding. It’s called “credit utilization”. Look it up.
2. “Forgetting” to pay bills.
Not only are late fees just plain frustrating, but also failure to pay bills on time will damage your credit score. While being late a few days won’t have a serious implication, missing an entire billing cycle will.
3. Applying for every credit card you qualify for.
Maybe you feel honored that every credit company is vying for your affection, but this is going to hurt your credit score in the long run. Around 10% of your credit score depends on the number of credit cards you’ve applied for recently. It’s ok to say no.
4. Closing inactive accounts.
That being said, the opposite is also true, closing existing accounts can be even worse. Let’s say you have a great credit history with one of your accounts, closing it wipes out your squeaky-clean credit history as if it never happened. Unless your bank is charging you annual fees, stash the cards away and keep them active.
Remember that cleaning up your credit score takes time; it also doesn’t guarantee that you’ll get approved for a business loan. Get started fixing any discrepancies or errors now. That way, you’ll be ready to get started franchising in the New Year!
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