Business Credit: Things to Monitor to Increase your Credit Score
Things to Monitor to Increase your Credit Score
Lending is one of the most common ways through which businesses acquire funding to grow their businesses. Lenders scrutinize your business credit to determine whether you are eligible for a business loan or not. Data on your transactions is collected by credit reporting firms, which is then used to generate your business’ credit report. Lack of a stable credit score may make conventional lenders refrain from extending credit to your business.
Here are a few factors you need to keep in check to increase your business credit score:-
Timely payments on loans and business credit cards
Being consistent in repaying your debts helps build trust with future creditors. Further, you avoid late payment fees as well as compound interests. Having the vendors also report your timely payments further improves your credit rating. Should you foresee a late payment, talk to your financier about it to see if they can omit late payment details on the data they hand over to credit bureaus.
The lack of using credit for your business does not necessarily mean that you have a good credit rating. In fact, creditors, due to the inability to assess your creditworthiness may be unwilling to extend business funding. Keep in mind that lenders might perceive too much borrowing as a lack of financial stability which can affect your credit score. Try keeping your debt levels to the minimum to raise your business credit rating.
Avoid closing credit accounts
Closing credit accounts that are no longer in use may be counterproductive as it limits the credit amounts at your disposal. Keeping it open increases your debt availability, consequently increasing the credit rating.
Reviewing your credit report every once in a while is necessary to see how you are performing. Have the agency correct any errors on your report to avoid low credit ratings.
More information on how to improve the credit rating for your business can be found on the Wexum website. Should you need any clarification or need answers, contact us. We are always happy to help.