Surely you have heard many times about the importance of having good personal credit, as it allows you to achieve goals and dreams that would be harder to attain without good credit, such as buying a house, or a car, or obtaining loans for travel or education, among many others. Similarly, having good credit is important at the commercial level, as it is advantageous for entrepreneurs. Furthermore, maintaining good personal credit is also important to help your business. Here, we explain how to establish good personal and commercial credit and the advantages for your business.

Personal Credit

Personal credit relies on credit reports from major consumer credit agencies: Equifax,Experian, and TransUnion. Currently, there are multiple online platforms where you can view and monitor your credit reports, and you can also obtain reports directly from these credit agencies.

Once you obtain a loan or credit card, creditors (lenders and credit card issuers) report your account information to the credit agencies. These reports take into account your payment history, credit length, the number of loans and cards you have, and the total credit you have compared to your debt, among other factors. All these combined factors give you your FICO® Score. The FICO® Score is a three-digit number based on the information in your credit reports and helps lenders determine the likelihood of you paying your loan, credit line, or credit card on time. This, in turn, affects the amount you can request, the term you have to repay, and the interest rate you will obtain.

To establish good personal credit, we recommend following these steps:

• Obtain a credit card or loan that reports to consumer credit agencies.
• Make payments on time, as this has a high impact on your FICO® Score.
• Use no more than 30% of your available credit on revolving accounts, as this also has a significant impact on your credit score. Remember that even if the card or line is at 0, it is considered that you could use it at any time.

Commercial Credit

Commercial credit is established in a very similar way to personal credit. Once a company is established as a limited liability company (LLC) or a corporation, it can also establish its own commercial credit.

Just like with personal credit, a company's creditors and suppliers can report accounts and payments to business credit reporting agencies, which then create credit reports for businesses.

To establish good commercial credit, we recommend following these steps:

• Establish a business structure (such as an LLC or a corporation).
• Open credit and term accounts that report to commercial credit bureaus.
• Make loan payments on time.
• Make on-time or early payments (net-term).

How Can Good Credit Help Your Business?

Having good commercial credit can be highly beneficial for your business, as it can help you obtain more favorable commercial loans and credit lines. It can also help you secure lower rates for commercial insurance and receive longer terms from vendors and suppliers.

Moreover, in many cases, evidence of the company's credit is required to qualify for government and corporate contracts, as without it, you may not even be allowed to bid.

Similarly, if you want to expand your company and need to raise money from investors, your company's credit will be a crucial factor that investors will consider when making a decision.

Remember that maintaining good personal credit is a key factor, especially if you will be a guarantor for the commercial credit you will be applying for.

If you need assistance or guidance with any financial aspect of your business, Oriental is more than ready to serve you. Visit orientalbank.com for more information.