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Missouri Small Business & Technology Development Center provides technical assistance to startup and existing businesses.

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By Jenny Miller
January 13, 2014

Tips to Improve Your Personal and Business Credit

This post is the sixth in an eight part series on how to prepare your business for success in 2014. Follow the links to learn how to prepare your business for successwrite a business plan, make your customers happier, make your business legal, market your business, boost your website’s visibility and finance your business.

A large part of preparing for a successful business is credit. Follow the tips below to make sure you have all your ducks in a row!

Personal Credit

Even if your business is going to be a totally separate entity, you still have to have your personal credit and finances in line when starting a business. Start by visiting www.annualcreditreport.com, the only authorized online source for a free credit report. Under federal law, you can get a free report from each of the three national credit reporting companies every 12 months.

Next, understand how your score is determined. Ask yourself these questions:

  1. Do you pay your bills on time?
  2. What is your outstanding debt?
  3. How long is your credit history?
  4. Have you applied for new credit recently?
  5. How many and what types of credit accounts do you have?

Lastly, make sure the information on your credit report is accurate. If not, take the appropriate action to fix the issue(s). The Federal Trade Commission’s “Building a Better Credit Report” has information on correction errors in your report, tips on dealing with debt, avoiding scams and more.

Business Credit

Business credit is monitored and reported by Dun & Bradstreet Credibility Corp. D&B uses a set of key ratings to determine business credit: paying bills on time, financial stress in the next 12 months and guidelines for extending business credit.

According to Nellie Akalp, there are six initial steps to establish business credit:

  1. Set up a business entity.
  2. Get a Federal EIN.
  3. Establish a business bank account.
  4. Get listed with the business credit bureaus.
  5. Establish business credit history.
  6. Maintain a good personal credit rating.

It is also important to protect yourself from identity theft and as an employer, it is your responsibility to protect your employee’s information. Follow these principles for a sound security plan:

  • Know what personal information you have in your files and on your computer.
  • Keep only what you need for your business.
  • Properly dispose of what you don’t need.
  • Protect the information that you keep (locks and passwords).
  • Create a plan to respond to security incidents.

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