3 Ways Business Owners Can Repair Their Credit for Stronger Finances
Your company’s business credit acts as a measure of how trustworthy lenders perceive you to be with borrowed money, so having the best possible credit score can help you access much-needed funds for a number of projects and purposes. For instance, you might want to be approved for a low-interest loan to help you build a new store location or develop an exciting new item. If you don’t already have good credit, however, you may need to perform some strategic credit repair to improve your numbers and get your responsibility rating up. While business credit functions a bit differently from personal scores, there are still a few principles in common when it comes to raising the score. Here are some ways you can start repairing your business credit for a stronger financial foundation for your company.
1. Use Less Than 30 Percent of Your Credit Limit
Once you have a business credit line, it can be very tempting to place all of your expenses on it every month. However, this not only makes it tougher to pull together the repayments, it can actually end up hurting your score. The sweet spot to aim for is to use less than 30 percent of your total credit limit, and ideally less than 20 percent.
2. Ask Whether Your Terms Can Be Readjusted
Part of what makes it difficult to handle bill repayments sometimes is short term lengths or high interest rates that can drive up the cost of each individual payment. To help ease the burden, consider asking your lenders whether your terms can be readjusted. Even slightly different repayment terms or partial settlements, for example, could be enough to make each payment more affordable for your company budget.
3. Set Your Bill Payments on an Automated Early Schedule
If you miss even a single payment deadline, it can hurt your credit score and make you appear more irresponsible to lenders. You can easily avoid this, however, by making your regular payments not just on time but early. Try writing yourself a note to pay the bills or set up an automated schedule to take care of it for you, so you won’t need to worry about missing a deadline accidentally.
Careful, regular credit repair can help your company improve your business credit score and up your odds of future loan approvals, since you’ll appear highly responsible and trustworthy to institutions like banks and other types of lenders. Fixing poor credit and overcoming shaky credit history might seem tough, but with these strategies, you can work towards an ever better score no matter your starting point.