Does your business have bad credit? Is it holding you back from reaching your goals? Are you ready to act?
Just because your business has bad credit now does not mean this must remain true in the future. By making a few key changes, you can boost your credit score and take advantage of many benefits as a result.
Here are five things you need to do if your business has bad credit:
1. Understand How Your Score Is Calculated
A business credit score ranges from 0 to 100, with 0 being the highest risk and 100 the lowest. Your score is based on a variety of factors, including but not limited to:
– Payment habits
– Outstanding balances
– Number of trade experiences
– Credit utilization
– Demographics, such as business size
– Knowing how your business score is calculated will help you understand where you have gone wrong in the past.
2. Review Your Business Credit Report
Along with your credit score, you need to review your business credit report. Once again, this will give you an inside look at what you have done right and wrong to date.
If you see something that is dragging your score down, endeavor to fix it as quickly as possible. Also, if you come across any inaccurate information, don’t hesitate to file a dispute.
3. Start Paying Creditors on Time
It’s essential that your business pays its bills on time, no matter what it takes. This isn’t always easy, but neglecting to do so could quickly drag down your credit score.
In the past, you may have made the mistake of missing a payment or waiting too long to remit payment. You can turn things around by making a concerted effort to avoid doing so in the future.
Implement a system for tracking when payments are due, as this will keep you organized and ensure that you are never late with another payment.
4. Eliminate Outstanding Balances
How much money do you owe, such as in the form of credit card debt and business loans? Are you trying to pay down the balance as quickly as possible?
It may not be simple to eliminate outstanding balances, especially if you’re stuck in a financial rut, but the more progress you make the easier it becomes to boost your bad credit.
Tip: Tally all your outstanding balances, breaking them down by type and balance due. This will give you a better idea of where to start. For example, you may want to pay off the smallest balances first, in order to clear them off your plate.
5. Don’t Shy Away from New Credit
Credit utilization will have an effect on your business credit score. Though you may be scared about applying for new credit, especially if it has gotten you into trouble in the past, you shouldn’t avoid it completely.
This doesn’t mean you should go overboard in applying for new credit, though! Be responsible with how much and when you borrow. Utilizing credit will go a long way toward giving your bad credit score the boost you’ve been searching for.
6. Continue to Track Your Progress
Once you’ve recognized that your credit score needs help, it’s time to make some key changes to improve your situation.
As excited as you may be about getting on the right track, remember this: you’ll never know if you are making progress unless you are keeping a close eye on your credit score.
This doesn’t mean you should obsess over this detail; nevertheless, you definitely want to track your progress.
Make it a habit to review your business credit report a couple of times per year and your business credit score once per year. That way, you can ensure that you are always moving in right direction.
A good business credit score is in the 76 to 100 range, and that is what you should strive for. By taking the steps above, you can begin to make progress toward that goal.
Have you overcome bad business credit in the past? What process did you follow to reach your goal? Share your thoughts in the comment section below.