Expert Tips on How To Improve Your Business Credit Score
As a business owner, there are some things that research and planning could never have prepared you for. Inventory issues, customers slow to pay and payroll issues have all plagued your brand new venture at some point in the last year. Now, with the busy season approaching, you need some help getting inventory stocked. There’s just one problem: the slow season wiped out your reserves. If you find yourself in a bind with a temporary cash-flow issue, you may want to apply for a business loan. Did you know your business has a credit score? Depending on your company’s debt and repayment history, that score may disqualify you from further loans. Take some steps to get your business credit score in order now.
Pay Your Bills Timely
One of the factors that affect your business credit score is bill payment. If you have a loan or business credit card, and those payments are getting difficult to make, your score will start to drop. Just like your personal credit score, paying your bills late or not paying them at all hurts your credit rating.
Having too much debt makes lenders hesitant to add more. If you have any extra cash flow, use it to pay down balances on credit cards, lines of credit, etc. Target those debts with the highest interest rates. Getting rid of high balances makes you more appealing for future lenders.
Negotiate With Creditors
If some of your debts are getting too difficult to manage, either due to climbing interest rates or high repayment terms, give them a call. There is no harm in trying to negotiate lower interest rates or more favorable payment terms with creditors. Your business credit score will not go down because you contacted a creditor. It will, however, go down if you stop paying them.
Establish Credit With Vendors
You most likely have a history of purchasing inventory from vendors. If you have paid for those goods on time, try to order items on credit. Instead of paying upfront or in advance, see if they will invoice you. This will not only give you some time to pay, but it also establishes trade credit which increases your business credit score.
Your credit score is essential to growing your business. That’s because you will, at some point, need to expand and gain access to higher lines of credit. Working on improving your business credit score now will set your business up for future success.