Move Your Business’ Credit in the Right Direction
Building strong credit is a key part of growing any size and type of business. When businesses are just starting out or experiencing a setback, it can be difficult for small business owners to get their credit where they want it to be. Missing the mark doesn’t mean that a business has to remain plagued by bad credit for years to come. Here are some simple but effective ways that you can put your business’ credit back on track.
Continue Monitoring Your Credit
If you’ve recently learned that your business credit is poor, don’t simply forget about it and check back in a year. Keep reviewing your credit on a regular basis. Monitoring it can help you assess what activities are impacting it the most and identify areas for improvement. Also, you can catch mistakes early on before they catch you by surprise when you need to present a strong credit score for things such as getting a new line of credit or applying for a small business loan.
Any account that shows as having a delinquency status can weigh down your business credit score significantly. Even if a creditor or a collections company isn’t chasing you for something that’s past due, that doesn’t mean that you should put it on the back burner. Try to prioritize paying past due accounts. Bear in mind, however, that an account which is long past due may not be collectible after a certain period of time depending on the applicable state where your business operates. Making a payment or acknowledging the outstanding debt could extend the time that an account remains collectible.
Manage Company Credit Cards Carefully
It’s essential that you keep a close watch over how everyone at your business uses company credit cards. Some businesses may try to keep spending limits low to prevent overspending, but this could have a negative effect on your credit score. Spending a lot of your available credit may constitute overutilization. With a higher credit limit, you’ll be better able to avoid overutilizing your cards.
Make Payments Consistently
Timely and complete payments of all of your outstanding obligations is one of the most important ways that can boost your business’ credit score. Good accounting procedures and careful budgeting will make it easier to be consistent about paying bills.
Ultimately, your business needs to have good credit in order to grow and thrive. Make a concerted effort towards developing financial practices that support your credit goals.