Check Your Credit
As many soloists know, it's very important to stay on top of your current credit ratings. This is not only to be aware of any potential identity theft issues, but also to insure that the information is accurate. When creditors review a solo business, they generally take into account both personal and business finances. It's in your best interest to make sure that the information they obtain represents you (and your solo business) well.
In addition, one common misconception is that if all of your credit cards are paid up, your credit rating will be excellent. In actuality, credit scoring is a very complex process, and one of the factors considered is how much open credit you have. If you have a handful of cards that you got some time ago (because you just couldn't pass up that on-the-spot discount if you signed up that day, for example), realize that it can be a liability. Creditors assume that you could max out every single one of your cards, even if they currently are paid in full or haven't been used in a while.
A good habit is to request credit reports from each of the three leading credit reporting companies once a year. You can order your reports online or via the telephone, and each costs about $9. (Some will try to up-sell you on other reports, but for basic purposes, you won't need those.) The companies and contact information:
Equifax: 800-997-2493; http://www.equifax.com
Experian: 888-397-3742; http://www.experian.com
TransUnion: 800-888-4213; http://www.transunion.com
In the past, I have ordered one of these reports regularly, but last month I decided to order all three and see how they compared. It was an interesting research experiment, in terms of customer service, data reporting formats, and accuracy.
The information contained on each report was essentially the same -- and all included accounts that I had considered "closed" a long time ago, but they stated them as only "inactive." It required some followup cleanup work, which wasn't too difficult or time-consuming. Experian's report was the easiest to read, with a much cleaner graphic layout than the dense rows of data and figures on the others.
One other revealing item on each report is the number of times your credit status is "pinged" by companies who want to sell you something -- those credit card company pitches, for example. Each report gives a list of the companies who have "knocked" on the door (and get limited information) as well as those companies who get a full report (say, when you went to get that car financed).
If you haven't reviewed your credit reports lately, it may be the best $30 you spend this quarter. Even if you're not in a financial situation where you may need to tap into credit resources, keep in mind that it can take several weeks for credit reporting companies to update and correct information. It's better to grab 15 minutes and make three phone calls to stay on top of a situation that can have a profound impact on your solo business.
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Working Solo is a registered trademark, and The Frugal Entrepreneur, SOHO Connection, the Business Gym, and the Personal Pathfinder Program are trademarks of Terri Lonier. All other trademarks are the property of their respective holders.
Copyright 2004 Terri Lonier. All rights reserved.
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