Ask the Vetrepreneur: On loans and credit scores

If you’re looking to fund your business, you have three choices: fund it yourself with the help of friends and family, give away equity in your company to investors, or take out a business loan. Here are a few things you should know about loans:
Q: At what point should I take out a loan for my small business?
A: When it comes to funding your business, there is no “one size fits all” approach; it will largely depend on the needs of your business and your vision for growth. Generally, however, the time to take out a loan is at the point where you need capital but don’t want to give up ownership of your company for it.
Q: What is the difference between secured and unsecured loans?
A: Secured loans require assets to be pledged as collateral in the event of a loan default. These can be tangible assets such as equipment, or assets such as future receivables. Unsecured loans don’t require collateral and are typically backed by a personal guarantee.
Q: How do I improve my credit score?
A: There are a few simple steps that can improve your credit score over time:
Pay your bills on time. Missing a payment here or there is not a huge deal, but added up consistently, your credit score can be negatively affected. Set up reminders on your calendar or phone to help you keep track, or schedule automatic payments through your bank account.
Maintain a low balance on your credit cards. Always pay off credit cards with the highest interest rate first while maintaining minimum payments on other cards.
Keep accounts open for as long as possible. Your credit can improve with the age of your account as you build up good credit history.
Credit Karma and NerdWallet are also great resources for helping you keep track of your credit score and offering suggestions to improve it over time.

Mark Rockefeller is an entrepreneur, attorney and veteran. He is the co-founder and CEO of StreetShares, an online marketplace where investors compete to provide shares of commercial loans to small businesses.
Follow Rockefeller on Twitter @markrockefeller or StreetShares @StreetShares
Have a question? Send it to him at questions@streetshares.com.