6 Ways To Recover From A Bad Business Credit Score

6 Ways To Recover From A Bad Business Credit Score

Any business owner would want their company to thrive and grow. With this in mind, one of the considerations you need to focus on is building and maintaining good credit. Because if you do not focus on doing so, your business loans could get rejected. So, if you’re having a hard time managing your business credit, it might be time to find ways to fix it soon. 

A business credit score works similarly to a personal credit card. Maintaining within your limits, paying bills on time, and avoiding debt can help establish a good rating. Unfortunately, many business owners overlook the task of checking their ratings. If you make an effort to look after your business credit score, it can help you attain your business goals. Additionally, a good business credit score will help save money in the long run since you’ll have access to loans with lower interest rates. 

If you have an undesirable business credit score, it’s crucial to make a move right away to improve it so you’ll enjoy the benefits. Here are several measures worth considering if you want to recover from a poor business credit score effectively:  

  1. Make It A Priority To Settle Payments Before Deadlines  

Having several payments way past the due date can be detrimental to your business credit score while ruining your connections with vendors. Processing your payments promptly, especially to trade references or tradelines, is crucial in rebuilding your business credit.  

Paying your debts on time will show a good track of financial responsibility, which is necessary to help fix your business credit score and rating.  

In case you’re having a hard time paying off all your debts on time, it might be best to start with the most significant invoices you have. Doing so will greatly help minimize damage to your business credit score if you initially cover the highest debts you owe to trade references. Additionally, if you’re struggling with your payments, you might want to reach out to your creditors and negotiate more favorable terms. 

If you want to be familiar with the tradelines that appear on business credit reports, consider checking out Credit Strong’s business tradelines. 

  1. Separate Your Business And Personal Finances 

When managing a business, use a separate entity and avoid combining it with your personal transactions. If you don’t want your business and personal finances to mix up, it’s best to utilize two separate accounts. This approach will allow you to monitor and manage your personal and business finances more efficiently.  

  1. Establish Credit With Vendors 

One of the ways to fix your rating is to build credit with vendors. Make it a priority to establish good relationships with your vendors and suppliers, they’ll likely report timely payments to the credit bureaus if you do so. Nevertheless, not all vendors will do this, so it’s crucial to work with reliable and considerate vendors and creditors that’ll report good payments to the credit reporting agencies.  

  1. Open An Additional Credit Line  

When you have a poor credit score, applying for another secured business credit card might be an option worth considering to help restore or establish your credit. Since a deposit backs it, it’ll be easier to gain approval for a secured business credit card even with a poor credit score, unlike a regular business credit card. Make sure you’ll pay your bills on time since it’ll reflect on your credit report.  

  1. Cut Down On Your Utilization Rate  

Generally, any debt can influence your credit score, but lenders will also evaluate your current utilization rate. Lenders will analyze the amount of debt you have versus your available credit.  

For example, if you currently owe USD$10,000 on your credit card with a credit limit of USD$20,000, you utilized up to 50% of your available credit. A utilization rate that high will likely affect your credit score negatively.

One way to minimize your debt is to maintain the utilization rate below 30% on all your revolving accounts. You should only charge an amount you can quickly pay off every month. 

  1. Regularly Check Your Credit Reports  

Make it one of your objectives to keep up with your credit reports to ensure all the information is accurate. You wouldn’t want to have a bad business credit score due to incorrect details. When you spot any erroneous data, it’s crucial to file for corrections right away.  

Remember that every credit reporting agency has its specific procedures when disputing errors. In most cases, it can take a month or longer to fix any mistakes in the report. 

Final Thoughts 

A business credit report plays a crucial role in assessing overall creditworthiness. Fortunately, when you’re facing a poor business credit score, there are various ways to fix it. One of the best solutions is to ensure timely payments with your lenders, suppliers, and creditors to help boost your business credit score in no time.

The post 6 Ways To Recover From A Bad Business Credit Score appeared first on Entrepreneurship Life.

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