Access to business financing and your business credit for things like lower interest rates, better terms for business contracts, lower insurance premiums and a higher limit for your business credit cards is paramount if you want to grow your freelancer gig, turn your side hustle into a full time job, or become a leader in the gig economy. But if you're personal credit history is spotty, then any business credit is going to be difficult to get in terms that favor you. Here are some solid steps to getting your personal credit back to good standing or establishing good credit if you don't have any.
Put together specific and measurable goals, whether it was to start a business, get a personal loan, open a certain bank account, buy a home, whatever it is you need to set a goal and envision yourself living in that goal.
Setting a realistic budget: You need to calculated what you can actually afford and pay down regarding your debt. Considering your income, expenses, travel, transportation, lodging, and meals helped you assess your financial situation better.
Use apps with user-friendly interfaces to keep track of your spending and take advantage of your bank's reporting features. Quicken books is good to separate business and personal expenses, track taxes, and sync with other banking and budget apps. You can also sign up for Credit Sesame, which allows you to see your credit breakdown and receive credit card offers as your credit improves.
Next, sign up for Fingerhut credit builder program and make a purchase and counterintuitively spend more than you need to. Then diligently pay it off every month, not the full amount but the minimum, to reestablish that you can be responsible with credit. Even with the worst credit score, Fingerhut will give you a $500 credit limit, likely with a 27% interest rate and way over the MSRP in their catalog, but it's a start and within no time you'll be getting much better rates.
Then open a savings account on self.com. Their monthly payments to this account were reported as credit payments. After a couple of months, you're given access to the money and are offered a secured card based on the amount saved.
From there, it's a matter of maintenance. Keeps tabs on your credit via Expedia.com and Credit Sesame, while patiently waiting for the negative marks on your credit report to fall off. During these years or months maintain solid repayments, monitor your credit score to get encouragement as it starts to increase dramatically even after the first week or two. Remember to ask for credit line increases from your credit card companies every six months, and live realistically within your means. Also, it's important to not cancel or close any of your credit accounts.
More to come on credit hacks in subsequent blog posts, until then, protect your time, make more money and gig smarter, not harder.
