WHETHER you are just starting your own small business or have been in the business world for several years, you probably realize that importance of a respectable credit score in business banking. Although you may be reliable when it comes to making payments and managing your credit accounts, even the smallest slip up can have an effect on your ability to maintain your credit score. If you are a business owner, here are five easy and quick ways to get your credit score back up.
1. Keep Accounts Open
As a business owner, you likely have a variety of different credit accounts open for different expenditures. When you no longer use an account, it may seem like common sense to close that account. A businesses’ credit score is determined by two factors, their ability to make payments on time, and how often you use your credit accounts. While payment punctuality is important, accounting for about 35% of your credit score, using your credit accounts takes precedence. If you want to improve your credit score for business banking purposes, don’t close your accounts and keep using credit when feasible.
2. Up Your Credit Limits
If you can, ask your lenders to raise the credit limit on your accounts. This will give you a higher debt ratio, a factor that has an impact on your credit score. However, be careful. If you believe that raising your credit limits will cause you to spend irresponsibly, stick to your current credit limits.
3. Get Rid of Unhelpful Debts
Some types of debts help out your credit score more than others. For this reason, it is crucial that you pay off debts that are hindering you credit score as soon as possible. For instance, no money down financing debts should be your first priority to get rid of. One consideration you should keep in mind is to pay these debts off quickly but if doing this prohibits you from paying off your mortgage or a lease on your property, these debts can wait until a more opportune time.
4. Give Your Collectors a Call
One of the negative effects of a poor credit score and debt is creditors knocking on your door and calling you every time you turn around. To improve your credit score, be proactive about dealing with collection agencies. When you call credit collection agencies, negotiate with them to try and mark your outstanding accounts with the designation that they were paid as you originally agreed.
5. Keep Up Good Habits
If you have a good credit score, ranging anywhere from 650 to 750, let it be. Although you can keep building your credit score, it is not necessary to go to drastic measures to improve your accounts. As long as you manage your credit lines effectively and keep making payments to lenders on time, your score should continue to rise.
Although your credit score doesn’t give lenders the full picture of how you run your business, it is often the first thing lenders take into account. If your credit score is less than stellar, try applying some of these techniques to get your credit score back up to a rating that assists you in running a successful business.