Your credit score is your ticket to personal and business success. If your credit score is in the dumpster, you either can’t get credit extended to you, or you will be asked to pay insanely high-interest rates on that credit.
In either case, bad business credit can spell doom for a business.
Almost all new ideas, product innovations, marketing plans, and new services, need financing. Often that financing is extended credit.
If you can’t get a loan at a reasonable interest rate, your hopes and dreams for scaling come tumbling down.
So it makes sense that a business would carefully approach the issue of credit score.
What Is Business Credit Score
Just like your personal credit score, credit reporting agencies compile frequent reporting over the nature of your outstanding credit profile. They then calculate a score. Your payment history, current balances, and open credit will all play a pertinent role in your overall small business credit rating.
If your business frequently makes late payments and much of your extended business credit is nearly maxed, your business credit rating is likely to suffer the consequences.
Business credit ratings are ranked from 0 to 100. You want to be closer to 100 than 0. At Check Issuing, our growth would have been stymied by poor credit. It is something we take ultra-seriously.
When Your Business Credit Rating Is Low
Your entire business will suffer the consequences of a low business credit rating.
The higher your business credit score, the better your loan opportunities will be. You will have banks competing to loan you money because the odds are, you’ll pay it back on time.
They know the odds are favorable for you paying back the loan on time because your business credit score is high.
But fear not, if your business credit rating is low, there are numerous ways to improve it.
How To Improve Business Credit Score
Improving your business credit score can be done by adhering to a number of simple pointers. It won’t happen overnight, but it will happen over the course of months and years.
If you have low business credit, you should start improving it months BEFORE you need to apply for extended credit or loans. This way, you’ll be in good shape when you apply.
Check Your Business Credit Score
Knowledge is power.
And that’s never truer than in the case of your business credit score. This also holds true with your personal credit score.
You can’t remedy what you don’t see or understand.
First, you might get false credit marks against you. Even if your business credit is good, you should always make sure that you aren’t getting false checks against your credit. This happens more frequently than you might think.
When you check your business credit score frequently, you can see these negative instances right away and move to fix them.
You can get a copy of your business credit score simply and easily through Experian, Equifax, and Dun & Bradstreet.
Knowing what your credit score is means you understand what you need to do to improve.
Open Available Credit
If your business credit score is low because you have too high of balances on credit cards, this means your plan should be to pay down those cards and free up available credit.
This is often the issue for small businesses suffering from low business credit scores. Many people don’t realize that available credit is a huge factor in credit score.
Pay On Time…
If bills are being paid late, then, well, you need to start paying on time. This really is obvious, but all too often, small businesses don’t pay bills on time due to disorganization.
If you don’t have a smooth sailing accounting team, your business credit could be sinking.
Dispute False Reporting
Yep, as I mentioned earlier, sometimes your credit report marks negative instances against you that you didn’t do.
So long as you monitor your business credit report, you’ll see these instances immediately and be able to quickly dispute them.
And it’s extremely important that you dispute them with a sense of urgency. Credit report disputes can take time, even months or longer.
If something pops up on your credit report that isn’t yours, even if happens to be good, immediately dispute it.
Negotiate With Creditors
If you do have some creditors giving you negative marks and you can’t pay them off, give them a call and see if you can negotiate new terms. The vendor may opt to allow you to pay them partially.
If the vendor has already turned you over to a third party credit agency, consider having an attorney contact them. This typically means they paid pennies for your debt. Your attorney may find they don’t have a valid right to the debt.
Your business credit score is essential to growth. If you have poor business credit, you’ll end up paying tragically inflated interest rates for loans, or not getting approved for extended credit at all.
In order to scale your business, the ability to get financing and extended credit is essential.
Improving your small business credit score isn’t difficult, but it does take a little focus. The most important thing you can do is to consistently check your credit score.