10 Ways To Improve Your Credit Score and Why You Should Care

10 Ways To Improve Your Credit Score and Why You Should Care

This is not professional financial advice. Consulting a financial advisor about your particular circumstances is best.

For fashion startups, or any kind of business, access to financing can be the key to success.

Too often, fashion entrepreneurs overlook the financial planning that’s required to create a sustainable business that will launch collection after collection.

Creating a long-term brand instead of a discreet product line the launches and stalls is the goal. A good or excellent credit score can MAKE a fashion brand.

In this post, I’m sharing information on credit scores – what they are, why they’re important, and what to do in order to raise your credit score.

What Is A Credit Score?

A credit score is a number that indicates how likely a person is to pay back a loan based on information in their credit reports.

Payment history, amount owed, new credit requests, length of credit history, and credit mix.

The two most important factors are payment history (35%) and length of credit history.

How To Check Your Credit Score

Checking your own credit report or score won't affect your credit scores.

It's an example of a soft inquiry—a request for credit info that does not affect credit scores.

Experian, TransUnion and Equifax offer all U.S. consumers free weekly credit reports through AnnualCreditReport.com.

These three companies are called credit bureaus, also known as credit reporting agencies or consumer reporting companies that collect and organize data to create consumer credit reports.

What Is a Good Credit Score Number?

According to Experian, one of the credit bureaus that tracks US consumer financial activity, a credit score of 700 or above is generally considered good.

A score of 800 or above on the same range is excellent. Most consumers have credit scores that fall between 600 and 750.

What are the different scoring ranges? | TIME Stamped

Photo Credit Time Magazine

Why Should I Care About My Credit Score Number?

There are countless reasons that a fashion startup should care about a credit score. Here are the most important reasons to care about your credit score. The next section will cover how to improve your credit score in 30 days.

Access to Better Loan Terms

A higher credit score can qualify you for lower interest rates and better terms on loans, potentially saving you thousands of dollars in interest payments.

Lower Insurance Premiums

Many insurance companies use credit scores as a factor in determining premiums. A higher credit score may result in lower insurance rates for auto, home, or renters’ insurance.

Renting a Home

Landlords often check credit scores as part of the rental application process. A good credit score can make it easier to secure a rental property.

Job Opportunities

Some employers check credit reports as part of the hiring process, especially for positions that involve handling finances or sensitive information.

Cell Phone and Utility Plans

Utility companies and cell phone providers may require a credit check before approving service. A higher credit score can make it easier to get utility services without a deposit.

More Business Training from Satsuma Designs

10 Ways To Improve Your Credit Score

Improving your credit rating is crucial for securing favorable terms on loans and lines of credit. Here are 10 legal and smart ways to improve your credit rating:

Pay Bills on Time

Late payments can significantly damage your credit score. Set up reminders or automatic payments to ensure bills are paid on time.

Reduce Credit Card Balances

Aim to keep credit card balances low relative to your credit limits. A lower credit utilization ratio demonstrates responsible credit management.

Limit New Credit Applications

Each new credit application generates a hard inquiry on your credit report, which can temporarily lower your score. Apply for credit only when necessary and don’t be tempted by the store cards that offer a discount on your current purchase.

When you’re running a fashion business, you’re planning for the long term, not a quick fix.

Regularly Check Your Credit Report

Monitor your credit report for errors or inaccuracies that could be dragging down your score. Dispute any discrepancies you find. Set up a calendar reminder to log onto one of the credit bureaus here: Equifax, Experian, TransUnion

Diversify Your Credit Mix

Having a mix of different types of credit, such as credit cards, installment loans, and a mortgage, can positively impact your credit score.

Become an Authorized User

If you have a trusted family member or friend with good credit, ask to be added as an authorized user on one of their credit accounts. Their positive payment history can benefit your score.

Keep Old Accounts Open

Closing old accounts can reduce your average account age and potentially harm your credit score. Keep old accounts open to demonstrate a longer credit history.

Negotiate with Creditors

If you're struggling to make payments, consider negotiating with your creditors for more manageable terms. They may be willing to lower interest rates or offer a payment plan. Pick up the phone and speak to a person. Explain your history and your goals and find a way to connect.

Use Credit Responsibly

Avoid maxing out credit cards or taking on more debt than you can handle. Responsible credit usage demonstrates financial stability to lenders. 

Seek Professional Help if Needed

If you're overwhelmed by debt or struggling to improve your credit on your own, consider seeking guidance from a reputable credit counseling agency.

How Long Does It Take To Improve My Credit Score?

To improve a credit rating by 10 points, 25 points, or 50 points depends on various factors such as your current credit situation, the strategies you implement, and the credit scoring model used by lenders.

Generally, making consistent, positive changes like paying bills on time and reducing debt can lead to gradual score improvements over several months to a year. 

Significant improvements, such as increasing your score by 50 points, may take closer to a year or more, depending on your starting point and the effectiveness of your credit improvement efforts.

It's essential to be patient and persistent in working towards your credit goals.

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