Many small business owners work extremely hard on a daily basis to keep their businesses thriving. From dealing with customers and vendors to finding the best ways to market their goods and services, small business owners go an extra mile to up their businesses and may at times, in one way or another, neglect their business credit ratings. With that said, your business credit ratings are obviously one of the most important factors when it comes to accessing finances to start, support and grow your business.
And even if you are operating the business from your home's garage, chances are you will at some point, borrow money to effectively launch or run your business, which in essence goes down to having a good business credit rating. It calls for the need to improve your business credit rating. Unfortunately for many small business owners, building business creditworthiness is not similar to a race car where you can rev the engine and get an almost instant result.
It is more similar to your driving record where everything including your past driving behavior and actions is taken into account. That is why it is advisable to follow these seven simple ways to improve your business credit ratings.
Pay Bills on Time
Being bad at paying your bills on time will damage your credit and hurt your business credit rating. Making late payments on your bills can dent your record especially if the creditor chooses to report you. It goes without saying that paying your business' bills before the due date is not only a good business habit that will improve your scores, but will also be beneficial in maintaining good relationships with your creditors.
Limit Credit Usage and Keep Debt Levels on the Low
Owing numerous amounts of money to the banks and other lenders will be one of the biggest factors affecting your business credit rating. While you may need a loan or two to boost the business and cover certain expenses, it is often advisable to keep any revolving debt low. Keeping low debt levels will lower your credit utilization, which works well in keeping your credit rating high.
Check Your Business Credit Report on a Regular Basis
It is true that many business owners do not know their companies' credit scores. It should be noted that it is highly important to periodically and regularly monitor your business credit report to avoid errors and inaccuracies that may lead to the downfall of your credit score.
Strive to Use Credit
As many financial experts will point out, credit usage is a game that has to be played. You will need to open a few business credit accounts such as credit cards and loans and ensure that you play by the rules and pay back on time.
Avoid Closing Accounts
Closing off credit accounts and removing them from your credit report just because they are paid is an uninformed choice that every small business owners should avoid. You have probably spent the last few years working tirelessly to pay off your card balances and may be tempted to close down to accounts to curb future spending. However, closing these accounts may have an adverse effect on your business credit rating and may, in turn, limit the amount of credit that is at your disposal.
Correct Any Mistake
It is true that even the simplest of mistakes or errors such as a wrong address can massively dent your business credit rating. It is basically recommended that any mistake on the credit report, however small it is, should be corrected in the fastest manner possible via repairing business credit.
Do Not Use Your Credit Power to Hint at Risk
One of the best ways to improve your business credit rating is to avoid any kind of risk that would sink it in the first place. Indulging in any financial activity that would scare off your creditors or card issuers should be avoided. For instance, you should not involve yourself or the business in activities that may indicate, in any way, of future or current money stress.
Using the above simple tips will help you build and improve your business credit rating. You will not only be able to obtain larger business loans but will also stand a chance of getting more favorable terms.