How to Protect Your Credit: A Guide For Small Business Owners

As a small business owner, you need to have good credit to grow your business.

You know what they say, an ounce of prevention is worth a pound of cure. It takes some time and a bit of planning to prevent credit problems, but far less than fixing credit problems.

Learning how to protect your credit is as important as locking your businesses front door at the end of the day. Only you should have the key. Read below to learn the different options you have to guard your credit.

how to protect your credit.jpg

Who Controls My Credit Reputation?

There are three credit bureaus that collect credit information on you. Don’t let the word “bureau” fool you. These are not government agencies, they’re for-profit businesses. Experian, Equifax, and Transunion are the three national consumer credit agencies.  Most small business lenders rely on your personal credit to make decisions about extending credit to you.

Freeze Fraudsters Out

You can contact each of the three credit agencies and request a credit freeze. This prevents any creditors from checking your report. This means that if you forget you put the freeze in place, and you apply for credit, you’ll be rejected. It also prevents anyone from opening a new credit account under your name and social security number. 

Be Alert!

You can also choose to place a fraud alert on your credit report. This option allows creditors to check your credit report.

If they see you have a fraud alert on your account, they should take extra steps to confirm the identity of the person applying for credit. This could mean contacting you at an email or phone number you provide to verify you’re the applicant.

Purchase Identity Theft Protection

According to the Consumer Financial Protection Bureau, paying for an identity theft protection service is like paying an insurance premium.

These services typically cover some out-of-pocket losses, chat room monitoring, public record searches, monitoring black market websites, virus protection software and of course credit report monitoring.

How to Protect Your Credit When You Shop

Pausing a moment before you use your card at a store or to make a purchase online can go a long way in protecting your credit. Learning how to protect your credit starts with choosing the right credit and debit card.

  • Use Chip or Tap Cards. Swiping your card subjects you to skimming or cloning of your card. If a merchant doesn’t have a chip or tag reader, you may want to pay cash.

  • Encryption Please. Before you make an online purchase, make sure the website address starts with HTTPS (not just HTTP) and that site’s purchasing page uses an encryption service.

You should also change your online passwords every six months to guard your credit. And only making purchases when you’re on a private and secure WiFi network provides credit protection as well.

Common Sense

In addition to the pro-active measure above, protecting your credit requires common sense. Shredding documents that contain account numbers and social security numbers should be a daily habit. 

Knowing how to protect your credit from fraudsters and putting that knowledge into practice should be a top priority for your business. Meet lenders who agree with you!