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Tips to Improve Your Credit Score
At some point in the life of your business, you’ll likely need to borrow capital. That’s why it’s important to build & maintain a solid credit score now. By building a solid credit score now you won’t have to scramble to prove to a lender you’re a good risk. Then, when the time comes to apply for financing it’s one less thing to worry about. Here are some simple tips to improve your credit score you can start working on today.
Know Your Numbers
A quick online search can help you find out your credit rating. Simply contact a credit reporting agency (e.g. Equifax, TransUnion, or Experian) to request your free credit report.
Your credit rating appears as a number between 300 & 900, the higher the number, the better your rating. The calculation is based on several factors, but the one that carries the most weight is your payment history.
When calculating your rating the credit agencies take into account whether you:
– pay your bills on time
– make at least the minimum monthly payment on your credit card balances
– have defaulted on any loans, or
– have accounts in collections
It’s recommended that you review your credit report twice a year to ensure there are no errors or omissions that may negatively impact your score.
Use credit with care
It can be difficult for a small business to qualify for a business loan or line of credit. This is especially true if you’ve yet to prove your company’s profitability. If this is the case, you may still be able to qualify for a company credit card.
A business credit card offers you an opportunity to build good credit at a low risk. Most likely you’ll be offered a card with a small spending limit at first. Use it wisely & commit to paying off your balance in full each month.
As you know – based on how your credit rating is calculated – there’s no better way to establish good credit than to pay your bills in full & on time.
Smart Credit Score Strategies
Use these 6 strategies to improve your credit score:
– use lendedu’s free debt repayment calculator & make a plan for paying off your debts as quickly as possible.
– when it comes to revolving credit, use no more than 30 percent of your available credit. The lower the percentage, the better for your credit file.
– talk to a lender about consolidating multiple credit card balances with a personal loan, mortgage line of credit, or balance transfer credit card.
– make multiple credit card payments throughout the month to avoid late payments, pay down your debt faster, & lower your interest fees.
– keep old, unused creditor accounts open, as a good long-term history with a creditor is to your advantage.
– try to negotiate with your credit card company. You might be surprised by their willingness to reduce your interest rate, lower your monthly minimum payment, or waive late fees.
When it comes to improving your credit score, slow & steady wins the race.
To help you stay motivated, keep your long-term goals in mind. Follow the tips to improve your credit score. This will help you make the effort needed to save money, keep to a consistent payment schedule, & use your credit wisely.
Then, when it’s time to invest in scaling your business, opening another retail location, or purchasing new equipment, you’ll be set to apply for financing with confidence.
Get in touch with us to find out more.
Photo by Avery Evans on Unsplash