Are you aware of your credit score? Have you checked your credit report recently? Your credit history has an enormous effect on your financial future, yet most people are shamefully ignorant about how credit history and fico scores play a significant role in your life and how to improve them.
Ignoring business credit score is one of the most dangerous mistakes you'd ever make. It's an important connection in the chain of achievement and success. If you're aware of your company's goodwill and reviews of your customer base, you must make your mindset like a lender or potential partners. You need to understand about how essential people see your business credit. You must think of how your personal life can be affected by personal credit. Bad credit poses many difficulties for an individual and the business entity too. You must also know that your business credit report and score is open to any concerned person who is interested in your business.
It is very difficult to monitor the everyday tasks and responsibilities, which come with small business ownership. But you must know that your company is depending on it. There are good resources out there which will help you to manage your business credit. Experian is one of the best companies which plays an important role in helping businesses to grow their credit by offering business credit reports. This credit report includes detailed payment trends, monitoring alerts, credit risk scores, industry benchmark data, etc.
Now, the economy is recovering, and it is the time to focus on your business credit score. Here you can find some helpful tips:
1. Check - You must be aware of your business credit report and get an idea about your business credit score. Your business credit report is normally used to take crucial financial decisions about your company, theses are like - determining the loan amount, which lender may approve, how much credit suppliers will extend, and what will be the chargeable rate of interests, etc. Keep an eye on your credit. Check out for small errors and rectify them before any damage happen to your credit score. You just need to check your credit report regularly.
2. Correct - Be active and make sure your business information is up-to-date and accurate. Incorrect or outdated information can make a wrong impression about your business. This can be very harmful as it’ll affect major financial decisions. New accounts have a noticeable effect on your business credit score. Try to play the game with a limited number of accounts, if you're planning to go for a big debt burden, like buying a property.
3. Protect - Regularly monitor your report and sign up for alerts. It’ll warn you any changes regarding frauds. Protect your business credit information from non-paying customers, partners, and suppliers. For that, you need to check their business credit report. Always pay on time, late payment can harm your score badly. Don’t open too many new accounts but don't close existing old accounts, close newer accounts before old ones.
4. Separate - Many small business owners don't separate personal identity from the business entity. So, often they use personal resources while paying business expenses and therefore don't build a separate business credit. At the initial stage while starting a business, you might need to use personal credit and guarantees. However, the weakness of relying solely on personal credit is clear. If your business ever goes down, your personal credit score may also have a risk. Failing to separate business from personal credit also can limit your business growth potentials.
5. Grow - Managing the factors that drive your score can make a positive impact and lead to more opportunities to grow your business, ranging from gaining capital to gaining customers. Therefore, take good care of your small business name and reputation. Choose to work with lenders, suppliers and creditors that report your payment history to the credit bureaus. And of course, pay your bills on time. The most powerful thing you can do to improve your credit score is to reduce your credit utilization. The less you use of your credit limit, the better your score.