You’ve finally decided it’s time to start your own veterinary practice, and of course, you’ll need to secure financing. Let’s say you’re still in significant debt from your student loan. What kind of impact will your credit profile have on your ability to obtain an acquisition or start-up loan with reasonable interest rates? 

In a word – major. 

Good credit is the basis for all of your financial investments, whether you’re buying or building your first animal hospital, or your first home. While lenders look at a number of factors when making a credit decision, the most critical aspects of your financial profile are your personal debt – including student loans, credit cards and lines of credit – and your overall credit rating based on amount of debt and timeliness of monthly payments.

Credit decisions for practice acquisition loans are usually based on an assessment of practice cash flow and your ability to repay the loan while covering your expenses and lifestyle. Credit decisions for practice start-up loans are primarily based on your debt-to-asset ratio. The amount of your personal debt will factor directly into both equations, and generally, a low level of debt yields a higher credit limit decision, while high debt results in a lower credit limit determination.

Following are 10 simple steps you can take to improve your credit rating and ensure a healthy financial profile:

1. Maintain at least two or three revolving credit accounts (such as credit cards and lines of credit).  This indicates you are credit worthy and able to manage debt.
2. Avoid applying for credit from too many lenders.  Multiple credit inquiries made within a short timeframe will negatively impact your credit rating.
3. Demonstrate that you know how to use your credit wisely by not using all the credit available to you.
4. Make on-time monthly payments on credit cards, mortgages, installment loans and student loans.  Remember, most service providers such as doctors’ offices, cell phone companies and health clubs do report late payments and collections to credit bureaus.
5. Consolidate your personal loans in order to improve your cash flow and generate a better financial profile.
6. If you are in dispute with a creditor, continue to make minimum monthly payments while you work towards a resolution.
7. Notify creditors in writing of your address change.
8. Avoid co-signing and/or guarantying a loan for a friend or family member, as it has the same impact on your credit as being the primary borrower.
9. Protect your identity. Review your personal credit report at least twice a year to ensure accurate reporting of all accounts. Inform all credit bureaus in writing of any discrepancies. 
10. Keep copies of all agreements, documents clearing judgments or liens, and letters from creditors clearing incorrect information reported on your loan history. Remember, all credit information stays on your records for up to ten years.

Having good, well-managed credit will help you secure the financing you need to purchase or build the practice you truly want. It’s never too soon to get started on developing a healthy financial profile.