By Fernando Berrocal
Every entrepreneur must understand the importance of establishing and maintaining good personal credit. As a founder, your credit score has a huge influence on your startup’s future. If yours is not optimal, restoring it needs to be a priority; high credit scores are directly linked to better financing outcomes. When you adopt a targeted approach to fix your credit, more financing options become available.
One of the most significant metrics relating to credit is your FICO score. FICO’s calculations are based on aggregated information from different financial (credit and banking) agencies. As a small business in pursuit of funding, you want the highest FICO score possible; a score of 700 (or above) is linked to ideal interest rates, while 650 is essentially the minimum to get a business loan at all. In the following list, we have compiled the best tools to help entrepreneurs improve their credit score–and “score” the best loan possible.
Credit Strong is an Austin, Texas-based, (FDIC)-backed fintech lender that helps clients improve their credit. In an analysis of 50,000 customer accounts, specific FICO scores increased between 20 and 30 points. Once approved - the application process is quick - Credit Strong puts a “booster” loan into a locked savings account. You simply make a small monthly payment; credit agencies log the payments, and your scores gradually improve. Credit Strong even helps you track this process–and when complete, the money goes back to you!
Chime is unlike any other credit card company. They work to improve your credit score by making automated payments between a customer’s dual Chime accounts. The card works anywhere Visa is accepted, and you can sign up without checks, fees, or deposits. Best of all, Chime reports every automatic payoff to credit agencies. In under half a year, most members improve their credit scores by 25-35 points.
Grow uses your favorite weekly/monthly services to increase your credit score–all through a “virtual” credit card. Their tiered services include a free option–other options range up to $10 a month. Unlike other options, you personally must pay off your balance (on time) in order for Grow to improve your scores. Many everyday subscriptions - your cell phone plan, Netflix, even scheduled food deliveries or exercise equipment - are fair game. Like Chime, the majority of Grow users improve scores by 25-35 points in under half a year.
Experian - a well known credit reporting agency - now allows anyone to improve their Experian credit report through directly linking paid bills and subscriptions. Normally such payments are too minor to factor into a FICO score–with Boost, they’re fair game. Simply grant Experian access to a debit/credit account, and your successful transactions start impacting your report in real time! Setup takes under 10 minutes, costs nothing, and can augment your Experian credit report by over 10 points.
Self Financial’s mission revolves around increasing credit accessibility. Self customers use a Visa card in conjunction with a savings account that holds a security deposit. In lieu of a (hard) credit check, users are responsible for depositing a security fee incrementally into their Self Financial account. Unlike other services, Self does not automate this process. After members successfully submit several payments on time, a loan is deposited into the account and the individual gains access to a linked credit card. In addition, Self offers options regarding credit limits and the amount placed in customer’s savings accounts.
Tomocredit specializes in making credit accessible to non-traditional applicants. After setting up a link to their bank account, customers are issued a Tomocredit Mastercard. The card is automatically paid off on a weekly basis; this successful transaction is subsequently reported to several agencies. Tomocredit also supplies resources for members to monitor their improving scores. While a user’s credit report is not guaranteed to improve within a certain window of time, this service is a great choice for individuals who typically encounter barriers in (smaller-scale) borrowing. Note that identification documents, and some tax form information (such as Individual Taxpayer Identification Number (ITIN) or Social Security Number) will be required–even for non-citizens.
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