For thirty-seven percent of working Americans, a single full-time job doesn’t cut it. Some has numerous side-hustles, while other may just maintain a single full-time job with a little gig on the side. Though the nature of these jobs can vary, many of them are performed under the guise of freelance or contract work.
While this type of work can certainly can help pay the bills or earn you some extra cash on the side, they may not always be reliable. On the surface, that may mean the occasional need to juggle finances or turn to a business credit card or loan until things pick up; however, out of that necessity breeds a new concern – your business credit score.
While the addition of all those side gigs isn’t outwardly problematic, if you try to get credit, particularly if it’s a loan, line of credit, or a mortgage, your multi-source income may be called into questions. And, if your credit score isn’t all that strong, you may be facing a long line of credit denials, even if your side hustles amount to a significant amount of cash.
Not sure what your credit score is? You can check your business and personal credit scores for free with Nav. Or, have you assumed like many that you your credit score is a single number from a single source? If so, it may be time to get acquainted with the primary scores that can affect your ability to secure credit and, in some cases, business down the road.
Just as important, it may be time to learn how to avoid damaging your scores or what you can do to improve your business credit score. Here are some tips.
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1. Pay bills on time
One of the major indicators of risk is a failure to pay, and both scores will be negatively impacted if you default on any bills, though as mentioned above, a late mortgage payment may be a bit more dangerous to your business credit score.
If you don’t’ think you can make the full payment on time, it’s best to contact the bill collector to determine if there are any options that will prevent you from being reported.
2. Keep Balances Low
Your credit utilization can indicate that you may not have enough funds to cover a variety of expenses and therefore a high utilization can damage your score. If and when possible, avoid carrying balances on your cards, but if you must, try to keep them as low as possible, with most experts recommending a utilization below thirty percent.
3. Avoid Multiple-Hard Inquiries
Hard inquiries are often used when you open a credit card, apply for a loan, or get a mortgage. And, though the occasional inquiry is likely harmless, when you have several in a short period of time, they can impact your credit, even if you aren’t utilizing the credit or didn’t proceed with the loan.
Be conscious of how many hard inquiries you are wracking up, and if you’re just shopping around and looking for quotes on a loan of any type, always determine if the company will run a hard or soft inquiry – soft inquiries won’t impact your credit and are often used specifically to provide quote or prequalifications.
4. Check Your Credit Report
There is a list of reasons why you should keep an eye on your credit report — it’s the key to finding the path towards strong credit. However, monitoring your credit can also save you from costly reporting errors or even oversights on your end, which can and do happen.
Not only can checking your scores help you maintain or improve your credit, but checking both can help you identify any potentially negative discrepancies between the two primary scores.
As a side hustler, you may have numerous sources of income, and though you may make just as much as the next professional, on lending applications, those numerous income sources may not hold the same weight as a steady, single cash flow. And while you may not be able to – or want to – change your affinity for the hustle, keeping an eye on your FICO and your VantageScore can help you keep your credit history healthy and your personal and professional life thriving.
Having emergency cash on hand can be your key to managing cash flow.