![]() So what does this mean exactly:Īccrual VS. Perhaps you have noticed in your accounting software that there are multiple ways to look at your overall sales. If you buy something, where does that money come from, and where does it end up? All of this is recorded in your “accounts.” ![]() The easiest way to explain this is with an expense. You can track different types of spending in these accounts, but they are also used to show anyway your money is used or stored.Įssentially, whenever you do something financially with your business, there is a money trail that needs to be recorded. Most software will have what is called a chart of accounts that shows this information. You might only look at your income, but you have to consider all these “accounts” to get a FULL financial picture. Plus, the good news is that if you forget what something means, you can always come back to our cheat sheet and look it up later on.Įvery business has different “accounts” that your business’s finances are categorized into-categories like assets, liabilities, equity, revenue, and expenses. We are guessing if you are reading this that you aren’t “in the know” when it comes to accounting, but we promise we will make this post as painless as possible. Since we get lots of bookkeeping questions from self-employed individuals at Rochon & Associates, we wanted to provide you with some of the basic accounting principles in an easy-to-understand manner – no accounting degree required. If you are unhappy with your current FICO ® score, follow these tips to start improving it.Wouldn’t it be great if there was some kind of accounting cheat sheet for business owners that made accounting basics simple? Well, look no further. Keep in mind that there are other elements financial institutions take into consideration when determining your credit worthiness. You now know what your credit score is, where you sit on the FICO ® scale, and what factors determine your FICO ® credit score. This is especially true if you don’t have a long credit history. New Credit (10%): Many lenders may see a red flag if they notice that you have opened multiple accounts over a short period of time.Types of Credit (10%): Your FICO ®score takes into account the mix of debt you have, such as: credit cards, retail store accounts, installment loans, mortgage loans, etc.Length of Credit History (15%): In most instances, longer credit history will increase your FICO ®credit score. This includes the age of your oldest and newest accounts, and an average age of all your accounts.Capacity (30%): How high is your debt versus your total amount of credit? If a high percentage of your available credit is used, it can signal to lenders that you are more likely to make late payments or have missed payments. ![]() Payment History (35%): FICO ®advises that the first thing lenders want to know is “Do you pay your debt on time?”.Now that you know where you stack up, it’s important to understand what elements make up your credit score, and how much of an impact each one has. There are things you can do to rebuild your score. ![]() If you are in this range, it does not have to be permanent. If you are in this range, you may find it very difficult to get approved for a loan.
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