Did you know that 7% of proprietors of small companies rely on beginning funding from business credit cards?
If your business credit score is low, it could hurt more than just your chances of getting a loan. A low credit score could also mean you’ll get a higher interest rate than you’d want on your loan — or no loan at all.
Getting a loan is one factor in keeping your business credit score high enough to qualify for loans. If a business fails to get a loan, it might mean the death of the company.
Read on to learn more about a good business credit score.
Knowing the Basic Principles
Good business credit translates into higher borrowing capacity and lower interest rates. The first step to maintaining a good credit score is to pay your bills on time and in full. This may seem obvious, but late payments or any delinquencies will have a severely adverse effect on your credit score.
Managing your financial accounts and scheduling appropriately to build credit slowly and responsibly is also essential. Monitor your accounts regularly to ensure all payments are made correctly and in the right amount. Make sure all the information reported to the business credit bureaus is accurate.
Evaluating Your Credit Reports
To get a good business credit score, start by looking at your payment history, including whether you have paid all your bills on time or missed payments. Pay special attention to the form and amount of credit used, such as:
- Loan payments
- Credit card utilization
- Other liabilities
It is also wise to check how long you have had various accounts and how those accounts are managed. Additionally, any open bankruptcies, foreclosures, or you should note tax liens to ensure they are not adversely affecting your score.
Finally, look at the types of credit accounts you have been approved for, as well as your age of credit history. You can make adjustments to ensure your credit score does not suffer. Learn more about how to get a high business credit score.
Establish a Credit History
Keeping the credit-to-debt ratio low and ensuring enough available credit will help improve the business credit score. Additionally, regularly monitoring your credit report on the business credit bureaus will help to detect any discrepancies or errors.
Finally, keeping personal credit separate from business credit, registering your business in the business credit bureaus, and paying taxes on time will help build a positive business credit history.
Monitor and Fix Errors
Disputing the credit report can not only help to repair the wrongfully reported data. It is essential to review the credit report to identify potential errors regularly. It is important to contact the credit bureau if any erroneous negative marks are placed or credit information is misrepresented.
This helps to ensure that the credit score remains uncompromised. Additionally, the company should have a system to track payments and ensure that all credit accounts are up-to-date.
Plan Ahead to Have a Good Business Credit Score
Maintaining a good business credit score requires diligence and effort. By taking these steps, businesses can succeed tremendously in borrowing and creating more growth opportunities. Start today and take control of your business credit score.
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