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How To Obtain Credit Reports For Small Business ?
 If you are running your own small business, the credit report for your company is the main key available to unbolt the doors through which you can acquire the amount of money required to fulfill the basic business needs. In majority of small businesses, money is obtained only after the successful delivery of the product. Owing to this constraint, financing or credits play an integral role in the successful functioning of a business. More..
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How Credit Report Affect Credit Score ?
A credit report, highlighting a person's credit history, plays a vital and crucial role in determining the final credit score of the person. The FICO scores usually fall in the range of 300 to 850. |
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Following are certain ways in which a credit report affects credit score:
- Whenever an individual applies for credit, the credit lending organizations or the lenders ‘inquire’ or ask the credit bureau for copy of his/her credit report. Such ‘inquiries’ from known and unknown businesses get listed down on your report. However, calculation of the FICO score takes into account ‘inquiries’ from only those lenders with whom you applied for credit.
- Apart from report inquiries, your credit applications also have a bearing on the FICO score. According to a research by Fair Isaac, starting a number of credit accounts in a short span of time implies a much higher credit risk and hence results in a much lower credit score.
- The influence of a credit application on the credit score of the individual depends largely on his/her distinctive credit history and hence varies from one person to another. Usually, inquiries have a very less effect on the FICO score. For a large majority of people, a new credit enquiry from a known lender deducts less than 5 points from your credit score.
- Such credit inquiries from lenders can affect the score significantly in case the individual has a short history of credit or a small number of accounts. Similarly, more credit inquiries signify great risk and hence lead to a lower score.
- Individuals with more than 6 credit inquiries on their report are found to be 8 times more prone to declaring bankruptcy than those who have no inquiries at all on the credit reports.
Thus, although credit inquiries on the report are important to assess the credit risk associated with an individual, they have a very small role to play in affecting the overall credit score. Other more significant factors of the credit report that affect the score include history of timely payment of all bills and the overall burden of different debts.
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