Having a good credit score is critical when it comes to important tasks such as applying for rentals, taking out loans, or getting mortgages on properties. However, if your business credit score has become damaged due to mistakes you’ve made in the past, it’s possible to repair it if you take the proper steps. Here’s how to go about it.
Be Aware of the Basics
Before you can raise your business credit score, it’s important to know how these scores are determined. One crucial factor is whether you have a history of making payments on time. Late or missed payments cause credit scores to deteriorate rapidly. It’s desirable to have a balance of credit types and not too many accounts open at once. Long-term accounts show better patterns of behavior, while newer credit accounts indicate risk. Other considerations include the total amount of debt you owe and your debt-to-income ratio.
Avoid Additional Debt
When you’re repairing your credit, don’t close current accounts, because account history is an important factor in credit ratings. However, avoid the temptation to open additional accounts. Keep your debt-to-credit ratio as low as you can, and work on reducing the debt that you already owe.
Reduce Current Debt
To reduce the debt that you already have, scrutinize your budget and trim away any unnecessary expenses. Look into the possibility of additional sources of income. Try negotiating interest rates with your creditors. Consider debt consolidation if it reduces your monthly payments. Pay off high-interest debt first, and then go on to the rest.
Use Payment Reminders
To improve your payment history, resolve to make all your payments in full and on time. To facilitate this important step, set up reminders so that you always know in advance when payments are due.
Form New Habits
Once you’ve managed to improve your business credit score, keep it high by forming new long-term habits. For instance, always pay your bills on time. Periodically check your credit score to monitor your progress and check for any inaccuracies. Create an emergency fund for unexpected expenses.
For more advice on improving your business credit score, contact Safe Harbor Commercial Capital.