How to Start Your own Business – More Steps for Improving Your Credit

When working on self improvement, it’s essential to have a bench mark, a way to keep score. Now that you’ve started to handle your debts in a timely manner and feed those hungry credit cards. It’s time to take a financial snapshot of where you stand so you can keep track of your progress.

Instructions

Difficulty: Easy

1. Determine your net worth.
   The formula is easy. Take your total assets and subtract your total liabilities to arrive at your net worth. Be sure to consider everything such as cash value life insurance, house furnishings, equipment and loans owed you. It’s important to get an accurate assessment. If you bought real estate at the market’s peak and neighboring homes are now selling for less, be honest with yourself and value it for less. Don’t assume that the money you owe on your car would be recouped if you had to sell it tomorrow.
2. Keep your debt reasonable.
   As you continue to pay down your debt, it’s useful to see how financial professionals assess how well you’re doing. Your total payments for housing, credit cards and all other loans should fall below 36% of your gross monthly income. If you have a mortgage, that loan alone should be less than 28%
3. Avoid unnecessary credit inquiries.
   Don’t ask for credit unless you need it. Any time you authorize a business to check your credit, an inquiry record is maintained. Too many inquires in a short period time can be a red flag for creditors that you are in tight financial straits or taking on more debt than you can handle.
4. Maintain a small number of credit cards.
   There’s a balance here, no pun intended. It’s better to have the same debt spread over five cards than to be hitting the limits on three. Creditors look at the percentage of your credit line that you owe. However, too many cards increase your potential for spending excessively and falling deeply into debt, a negative.