Have you ever faced a “no” from the credit agency due to the poor record of your bad or personal loan? If it’s so, then there is an urgent need to revise your payback policies. The business with poor credit scores is lacking in the smooth operations of their business. Borrowers with bad credit limit face higher interest rates and high insurance premiums.
A robust credit profile is not only beneficial for the business, but it also attracts the new business. Suppliers, customers, and partners can look at your credit reports to take important business decisions.
So are you worried about maintaining a strong credit profile of your business? We’re illustrating the 5 ways to establish good credit scores for your business.
Keep your information updated with the current bureaus
Several credit bureaus are available for collecting business information and formulating credit scores. Different credit bureaus have different formulas for calculating credit scores. Keep on feeding latest information to the credit bureau for making a fair credit profile of your business.
There is a point that needs to be noted here. As you don’t know which credit bureau your suppliers or potential customers will check, so it’s necessary to stay with the main credit bureaus of your country.
Keep trade lines with your suppliers
If you purchase supplies, materials or other ingredients from the suppliers, those purchases from third-party vendors could help you in building your business credit. A lot of suppliers extend the time period of the credit, it will allow you to pay after several days or several weeks of the arrival of the inventory.
Do you hold such type of accounts payable relation with your vendors? If it’s so, then ask your vendor to inform the business credit bureau about your payment. This will boost your business credit score as long as you follow the trade agreement. Either you’re working with a number of suppliers or not, it’s better to set the trade lines with small suppliers for having a payable record.
Pay your creditors on time or before
For keeping a strong credit history of your payments, always try to make payment on time or before time (if possible). This will increase the goodwill and ultimately the credit score in your credit bureau. Obviously, credit bureaus will only give higher scores to those who pay on time.
Improve your credit lines by utilizing the credit card in a reasonable manner. But don’t use it at max. Try to limit your spending to 20 %-30% of your credit limit.
Borrow from those lenders that report to the credit bureau
A small amount of business loan can increase your credit limit if you make payments on time. The lenders will report to the credit bureau about your credit. If you’re conscious about the credit record, then ask your lender to report to the credit bureau before you take the small loan for your business.
Banks also report to the credit bureau, but if you have a bad credit record, then the bank doesn’t allow you to borrow money. Keep in mind that small lenders who lend money to bad credit borrowers also report to the credit bureaus in your country.
Always keep your credit record clear and transparent
For establishing and improving the credit score of your business, make sure that your credit reports depict the true and fair view of your credit record. If you have a poor cash outflow routine, don’t make payments on time and bear higher interest rates on your credit, your reputation will be affected publicly as well. Negative marks on your credit report haunt you and you won’t be able to retain the credit score of the business.
Point to consider
If you’re having a strong credit profile, you’ll have smaller interest rates on your borrowings, credit cards, and flexible or better suppliers’ payment policy. Even this positive thing can attract the potential customers, after gauging the trustworthiness of your credit score.