Small Business Owners and Their Credit Scores

Some small business owners might be surprised to learn that their credit score can be a significant factor when applying for financing. It highlights the importance of being proactive in managing your credit file. I put together a few points on how credit scores are derived and how you can improve your score.

1) Pay on time: The single most important factor in maintaining or repairing your credit score is your payment history. According to, payment history makes up approximately 35% of your overall score. For Banks, certain delinquencies carry more weight when underwriting your loan application. For instance, a mortgage delinquency is more troubling than a delinquent cable bill. Make every effort to make payments on time and your score will improve with time. Another good practice is to pay MORE than the minimum each month.

2) Don’t max out your credit lines: The second most important factor in determining your FICO score is the balance owed on your credit lines. Credit reports contain a percentage figure that shows the balance percentage of your total available credit. In general, keep balances below 50% of the available credit amount. Amounts owed on total credit accounts make up approximately 30% of your credit score.

3) There’s no time like the present: The final 35% of your FICO score is comprised of the length of your credit history and the diversity of credit accounts. I recommend that individuals begin building their credit as soon as possible which is typically at age 18. Your local bank is a great place to start but even credit cards through department stores will suffice.

4) Finally, pull your report yearly! This is important for a number of reasons. The most important is that by pulling your credit report, you can look for suspicious activity. According to the Washington Post, the United States is the leading country in credit card fraud. The issue is that you could be a victim without knowing it. Pulling your credit report yearly removes any surprises when applying for credit.

It can seem overwhelming at first, but understanding your credit score is important. As I mentioned above, a bad credit score can be the difference between being approved or denied for your loan request. Pull your credit report yearly and feel free to use resources such as for more information. As always, feel free to reach out with any questions!

What’s In My FICO Score. (n.d.) Credit Basics. Retrieved from

Tobey, Pam. (2014, April 14) United States is the Champion of Credit Card Fraud – but Europe is Catching Up. Retrieved from

Andrew H. Howard

From Middlesex Savings Bank

291 Main Street
Acton, MA 01720


Represented by


Featuring Recent Posts WordPress Widget development by YD