Bad credit is a major impediment to getting financing for your business. Having bad credit scores should not be a lasting feature of your business. With the right financial management practices, a business can turn around its credit history and status.
The following steps can be taken to rebuild your business credit:
Pay on Time: Repairing for bad credit score should start with making payments on time. Failure to make payments is not only bad for your credit score but it also severs your relationships with creditors and suppliers. Having a pattern of consistent debt repayment indicates fiscal responsibility. When it is not possible to pay off the debt in a month, start by paying off large invoices to avoid getting bad credit scores since some bureaus use a dollar-weighted methodology to calculate a credit score.
Negotiate for Better Terms
Negotiate for longer loan terms with loan providers and other creditors to safeguard your credit score. Longer terms are better since the business will have the required funds to repay a loan.
Lower Utilization Rates
The utilization rates of facilities such as revolving credit and business credit cards are a factor used in calculating a credit score. High utilization rate over long periods points to a risky business as a potential credit candidate.
Negotiate Payment Terms of Past-Due Accounts
Immediately contact your creditors if you have accounts that are past due date to negotiate a deal to restructure your debt. It will offer the business an opportunity to starting again on a clean slate.
Avoid Mixing Personal and Business Expenses
Mixing personal expenses with your business accounts since it will present a challenge when trying to rebuild your credit. Always separate personal and business expenses so that creditor repayments are easier to make.
Get a Business Loan
Getting a loan to repair your credit rating may not sound right. However, getting a loan will show that you are capable of making repayments and will lead to improved credit scores. A secured loan that a business can repay easily is the best option. Situations may differ from business to business and adding an extra loan may not be a viable option.