How dangerous are you and your company? Lenders will consider your company credit score as one of the primary factors in determining your capacity to manage your finances and repay any loans you may be granted. If your company credit score is poor, you may be considered a high risk, so you should work on improving your statistics before attempting to persuade a lender that you’re worth the money.
My buddy, the evidence is in the statistics.
Credit Scores and Business Credit Requirements
You certainly know all there is to know about personal credit, but what about business credit? Both are quite similar in several respects. The following factors are used to determine a company’s creditworthiness:
-Do you pay your payments on a regular basis?
-What kind of credit history do you have?
-What is the total amount of credit you have available, and how much of it have you used? (Your debt-to-credit ratio is this number.)
Business credit ratings range from 0 to 100, unlike the considerably larger figures you’re used to seeing on your personal credit report. The majority of lenders want credit ratings of 75 or above. If you’ve already obtained your company credit score and are dissatisfied with the results, you can (and should!) take measures to improve it right now. Take a look at them:
BUSINESS CREDIT FIX: CHECKING FOR CREDIT ERRORS
Examine your company credit report for mistakes up close and personal. You may report any inaccuracies to the appropriate credit agency and submit a formal dispute to have them rectified. The credit bureau has 30 days from the date of your application to validate your corrections and update your business credit file.
To do: Request a copy of your business credit report from one of the main credit agencies, such as Experian or Equifax, and review it for inaccuracies.
PROACTIVE BUSINESS CREDIT REPORTING IS THE SECOND BUSINESS CREDIT FIX.
Your company’s credit score increases in tandem with the number of suppliers that report a good credit history. Vendors seldom bother to record business credit transactions since they are not required to do so. However, if you urge your company suppliers to submit positive transaction reports on your behalf (assuming, of course, that you’ve earned them), you’ll profit from a higher business credit score.
To do: Contact the suppliers with whom you have a good working relationship today and request a positive transaction report.
REDUCE YOUR BUSINESS DEBT (BUSINESS CREDIT FIX )
Most credit agencies suggest that you maintain your company debt within 20% to 30% of your entire business credit limit, and if you do, you’ll earn extra points. If you’ve been borrowing more than you’re permitted, it’s a sign that your company is suffering and won’t be able to manage another loan. Paying down part of your company debt before applying for a loan may help you get accepted. Should a small crisis occur, they’ll be glad to know you have extra breathing space (such as business expenses increasing or profits taking a dip).
To do: Make and carry out a strategy to reduce your company debt to less than 30% of your credit limit.
BUSINESS CREDIT FIX : PAY ON TIME FOR BUSINESS DEBTS
Lenders search for trends to evaluate your chances of success. If they find evidence that you’re already paying on other company debts regularly and on time, they’ll be more confident that you’ll do the same with whatever they give you. If you haven’t been punctual or consistent, speak with your current lenders to see if they’ll waive any late penalties or erase any bad marks from your business credit record. It’s certainly worth a go, especially if your slips have been few and recent.
What you should do: If you have a strong connection with your existing lenders, check if they’ll remove bad records from your company credit report, particularly if your mistakes are minimal.
FIX FOR BUSINESS CREDIT: GET MORE BUSINESS CREDIT
The more business credit you have, the more information prospective lenders may use to assess your risk. Furthermore, as previously said, the more credit you have that isn’t being utilized, the higher your company credit score will be. Future lenders will be unable to properly assess your creditworthiness if you have little or no credit. Opening company accounts, even if you don’t use all of them, may be beneficial: Create a new account Enhance your lender connections. You may ask shops to establish credit cards in your company’s name if you already have a business loan. Your company credit score will improve when your financing availability increases.
To do: Get a company credit card or a modest loan if you don’t have any.
Building company credit is an excellent first step toward obtaining the funds you need. Please contact us with any questions you have regarding small business financing; it’s free, and we’d love to assist you on your path to realizing your dreams!