A good credit rating is essential for anyone running a business. Your credit rating heavily impacts your ability to qualify for loans and credit cards, which many businesses need to help maintain healthy cash-flow levels.
Furthermore, investors often base part of their decision to buy a corporation’s bonds, or even stock, according to the credit rating of the company and the company’s debt profile. So, if you’re looking to secure investment in the future, you need to start thinking about your credit score now.
Generally, your credit score is calculated by looking at a number of different factors: your payment history on loans and credit cards, any regular use of revolving credit, how long your accounts have been open, how often you apply for new credit, and the types of account that you have. If your credit rating is found to be poor, you will likely struggle to obtain the fast and affordable funding your business needs to grow. That being said, there are many simple things which you can do now to improve your credit rating quickly.
1. Review your credit report
Whilst this might sound completely obvious, many business owners do not keep regular track of their credit rating. Others do not even know what a credit report is, or that they even have one.
Be sure to regularly monitor your credit report to ensure that there are no errors which may be negatively affecting your overall credit score. Even if an error that crops up on the credit report seems small, it is certainly worth taking the time the adjust it. Something as simple as an incorrect address can damage your overall credit score, so be sure to amend any mistakes promptly and efficiently. You can check your credit score for free using Experian.
2. Join the electoral roll
Being on the electoral roll not only lets you exercise important democratic power, but it also improves your chances of being accepted for credit in the future. It allows potential lenders to easily verify that you are indeed who you claim to be.
That being said, it is also important to ensure that your credit records have the correct address details. This is a simple step that will help to support your credit rating and aid you in getting credit when your business needs it most.
3. Use a quick loan
Getting a quick loan is a speedy way to turn your finances around for the better. The additional financial help could allow you to get out of emergency money problems, but better still, it can be used strategically to improve your credit rating. You may want to use the funds to pay off any outstanding debt, but also repaying a quick loan on time can build up a history of timely repayments, and thus improve your credit score overall.
Applying for a quick loan can be done entirely online, so the process is usually fairly simple. Once your application has been accepte/d, you can expect to see funding in your bank account within as little as fifteen minutes.
4. Make timely repayments
Failing to pay bills or credit on time will certainly damage your credit rating. If you are able to start paying off any outstanding debt before it is even due, your credit rating will gradually improve over time, as well your relationship with your creditors. It is also just a good business habit to get into; organisation is key to any successful company.
5. Reduce your debt wherever possible
Owing money to multiple banks and other lenders can of course damage your credit rating. Whilst it’s normal for a business to have a couple of loans to keep cash flow steady, try to keep the number of loan accounts you have to a minimum, and try to pay any outstanding debt as soon as possible.
6. Close accounts carefully
Contrary to popular belief, closing accounts can in fact do harm to your credit rating sometimes. You may be tempted to close down credit accounts once they have been paid off to prevent yourself from further spending in the future, but often this should be avoided if you aim to keep a good credit rating. Be sure to thoroughly do your research before making the decision to close down any account. You can find further information on whether you should close credit accounts from Money Saving Expert.
Taking these simple steps will certainly help you to improve your credit rating quickly, allowing your business to get the funding it needs when it needs it, and in turn run smoothly and successfully. It is essential to have a good understanding of one’s own credit rating, and regularly give it the attention it needs to ensure it is in good shape. Something as simple as frequently reviewing your credit report can make the difference between a struggling business, and a business that is financially thriving.