As a business owner, it is vital to establish a decent credit score. An excellent credit score improves your chances of qualifying for business loans, as lenders will not have any doubts about your repayments. Also, an excellent rating protects your finances and helps you to secure the best terms of credit. Conversely, a poor score can make it harder for you to obtain loans or even attract business investors. You can, however, improve a poor rating with the following sure tips:
Separate Your Personal and Business Credit
Many business people experience challenges in separating their personal and business credit. While there might not be problems in using them together, your credit might negatively impact your credit score and make it hard for you to secure business loans. Similarly, the high business balances which accompany your business expenses may hurt your credit. Separating the personal and business credit can, therefore, significantly boost your credit score.
Pay Your Bills on Time
Lenders go through your credit report to know if you settle your bills on time. Your past payment history directly reflects your payment performance, and that is why they review your report. If you pay your bills at the right time, you will create a positive influence on the credit scoring factor. Examples of such bills include credit cards, bank loans, student loans, utilities, phone bills, and much more. It would be a good idea to use the available tools such as calendar reminders to alert you when your bills are due.
Check Your Credit Report Regularly
Keep an eye on your current credit report even when you are not seeking financial help. Credit reporting bureaus such as Equifax, Transunion, and the others allow business people to review their reports anytime. The regular checkups will help you to trace any inaccuracy and incorrect data entries, which might drag your score downwards. If you notice any mistakes, dispute the information immediately, and seek assistance to correct it. The credit bureaus take a maximum of 30 days to research the issue and respond.
Avoid hard inquiries
A hard inquiry happens when you keep on opening new credit accounts, or consistently apply for new loans. Every application reflects in your credit score, and it can remain on your credit report for up to two years. Many hard inquiries, therefore, create a picture that you are a risky borrower. To avoid hard inquiries, avoid making many loan applications within a short period.
The sooner you start working on your credit score, the sooner you gain a positive impact on your business. Follow the above tips, and you will see a noticeable change in your score.