Many small businesses often disregard the value of credit scores. They make the mistake of thinking that it is just a simple number, or they have the impression that they will not need it since they are not borrowing money. In reality, whether you are planning to get financing or not, you still have to make sure that it is in good shape.
For starters and business newbies, credit scores can play an essential role in your venture’s success. They are used as a barometer or indicator of your trustworthiness. The higher the credit score, the more trustworthy you are. And the more responsible you are, the more chances of having your loan application approved – whether it’s a collateral loan or a signature loan.
If you are looking to improve your business’ credit score, here’s what you need to do:
Never miss your bill payments
One of the easiest ways to improve your credit score is to make sure that you never miss a bill payment. More than that, make sure that you pay them on time. If you always miss your payments or you are receiving notifications and reminders from the credit company, you know that your score is going to suffer. Your other efforts to improve your credit might be overlooked or disregarded if you keep missing your payments.
Mind your credit use ratio
Your credit ratio is the amount of the credit used with the limit that you have. This is also something that credit card companies use to gauge credit score. When you always almost max out your card, that might be taken negatively by the credit card company. Make sure that your credit usage does not exceed the 20% mark of your credit limit.
To control your credit ratio, ensure that your balances are already paid off. It will also be wise to increase the percentage of your usage vs. the limit by actually increasing your credit limit. Another easy way is to decrease and control your credit card spending.
Check your reports for accuracy
Credit companies send reports to businesses to show them their financial and credit standing. But you might want to take some of their reports with a grain of salt. Always check for inconsistencies and inaccuracies, as these can tarnish your credit reputation. When you find some, contact your credit card or credit recording company to dispute the errors. Verification and correction should not be challenging on their end.
Settle other financial obligations
You might have other financial obligations, such as loans. And not focusing on them can affect your credit standing, too. Your outstanding balances from other credit companies or lenders can be used to gauge your credit score.
Make this a priority
You might not realize it, but credit ratings can affect your business’s success. This is especially true when it comes to funding new projects or launches through loans. You will want to secure great deals on loans, but you can only do that when you have a good credit score.