After years of working as a foreman for a construction crew, many people consider starting a business, and running a crew of their own to be the next step. It’s exciting to build something that is your own, and it’s much more profitable than toiling for an hourly wage. Even though you have years of industry experience, you don’t have much wiggle-room in your budget because of those same wages you’re tired of earning. You normally pay all your bills each month, but every once in awhile… you miss the due date. You may think this is not really a problem, so long as you pay them eventually, but in truth, it’s a huge deal.
Contractors Reporting Services has helped people just like you obtain their contractors license and start their business as a General Contractor in FL. One thing that surprises our clients the most is how much their personal credit score plays into their licensing process. The Florida General Contractors Licensure standards require a FICO score of at least 660 for all of their applicants. So, how you manage your budget in the years before and during your application process for your license directly affect when, and if, you can start your business.
We outlined some of the criteria used by the three national credit bureaus–Equifax, Experian and TransUnion– to determine your FICO score in order to give you an idea of what causes a rise and fall in your credit score. This is the breakdown of the categories that affect your credit, with the percentage of your total FICO score that they make up. According to myFICO.com:
* 35% Payment History
* 30% Amounts Owed
* 15% Length of Credit History
* 10% Types of Credit in Use
* 10% New Credit
Your FICO Scores consider both positive and negative information in your credit report. Late payments will lower your FICO Scores, but establishing or re-establishing a good track record of making payments on time will raise your score.
If your FICO score is below the minimum (660), it isn’t the end of the world. You can actually repair them over time, though it won’t happen overnight. Your top three priorities when fixing your score should be:
- Check your credit report – contact the reporting agencies if you see any errors.
- Set up Payment Reminders –consistently paying your bills on time is the best way to improve your score.
- Reduce the amount of debt you owe – debt:income ratio is a big consideration for lenders, so pay off as much as you can.
Once you have set yourself on a responsible financial track, myFICO.com provides these guidelines to bring your score back to your target area.
- PAY YOUR BILLS ON TIME
- If you have missed payments, get current and stay current
- Paying off collection accounts will not remove them from your credit report
- Keep balances low on credit cards and revolving credit
- Pay off balances rather than moving them around
- Don’t close unused accounts or open cards you don’t need, just to increase your available credit. This could backfire and lower your score.
- New accounts will lower your average account age and could lower your score
- Re-Establish your credit history of you have had problems. Opening new accounts responsibly and paying them off on time will raise your credit score in the long term.
- Do your rate shopping for a given loan within a focused period of time.
At Contractors Reporting Services, we want to help you grow your business until it is ripe with success. Give us a call today to see how we can help you get on the right track to obtaining your General Contractors license in Florida. We are here for you.
Contractors Reporting Services | 3795 N Nebraska Ave, Tampa, FL 33613 | 1-800-487-2084