Improving Your Personal Credit: Lendio Whiteboards, Episode 3 This week, we're talking about the best ways to help your personal credit, and the fastest ways to hurt your credit. TRANSCRIPT Welcome to Lendio Whiteboard. This whiteboard series is dedicated to the ins and outs of making small business loans simple. Last time we talked about four pillars of setting yourself up and your business for getting a business loan. Today, we're going to talk about Pillar One: Credit Score. Let's get into it. We're going to talk today about three ways to help your credit, and three ways to hurt your credit. The first way to help your credit is to have open and active accounts. I'm going to say three credit cards. Something some people will do, they’ll open a credit card and maybe they haven't used it but its ten years’ worth of credit history and they'll turn it off. You want the credit history that's going to help you. So as we get these credit histories, three cards; keeping those open and active. That's going to help you move right into a concept we're going to call "piggybacking". Maybe a family member or a relative you know has a really great credit history and a great credit score. They can make you an authorized user on the account, that's why we call it piggybacking, and that can really help you improve your credit. The easiest way, the fair, safe way of improving your credit is paying your bills on time. We know how it goes, the bills come, they're due but paying your bills on time is an important part of really helping improve your credit. Let's talk about some scenarios that could hurt your credit. A lot of people out there will ask you to co-sign on a loan; and you go, "Okay, let's do this." Now if you co-sign on a loan and the person who starts doesn't pay that loan, it's going to start hurting your credit. And so if you are going to go down that route, make sure you know that you are just as responsible as the person who actually signed and is paying that. Let's move onto the scenario I call the Car Dealership. You go to a car dealership looking for a loan, and they want to make sure you're approved so they have you sign a doc and it sends out the twenty applications, ten probably; and all of a sudden, he’s there they are on your credit or your credit report. That's going to hurt your credit 40 or 50 points. Something you can do that it will be helpful is go to your bank or your credit union get approved for the amount that you want; so when you walk into the car dealership, you have their pre-approval letter and you're ready to roll so you're not getting twenty inquiries. That hurts your credit. So a lot of people say, "Do you use cash or credit?" Well, the credit bureaus out there want to see your credit history like we talked about before. So having three accounts that are active, and you're paying off regularly is a phenomenal way of making sure you have great credit. If you can't have three accounts and you're not going to pay those off, of course it's going to hurt your credit. And then having installment loans; being able to pay back those loans. If you don’t pay back those loans, it's going to hurt your credit. So today we've really summed up three ways to help your credit and three ways to hurt your credit. Its super exciting to help you get to that 680. Because if you can get that 680 and 720, you're going to be setting yourself up better to get maybe a personal loan, a business credit card and even if you have more years and business and revenue, you're going to get one of those great business loans from your bank or your credit union. Thanks for stopping by and we'll see you next week. If you liked this post, you might like: Episode 1: The World of Small Business Lending: http://youtu.be/h2WAXVBORas Episode 2: The Four Pillars of Small Business Financing: http://youtu.be/6SL7U4UFriw To find a small business loans, click here to get started with Lendio.