If you’re an entrepreneur doing it on your own, you should consider financing. While the goal may be to grow your business and make a profit, building business credit should be at the top of the list. A good business credit score can play a vital role in keeping your sole proprietorship journey smooth and helping you achieve any other goals you have. When you think of business credit, money is the anchor. However, you can also think of supplies and equipment that you may need but cannot prepay. Importantly, building your business credit is a critical obligation you have to your investors, credit card companies and lenders. So it’s worth it find companies that help build business credit since the business credit report is what they look at when they decide to lend you money. Therefore, to qualify for loans, you must have good business credit, but what do you do if you have a low business credit score? In this article, you will learn ways to improve a low business credit score.
Purchase a corporate credit card
Even if you are a sole proprietor, it is necessary to separate yourself from the business. Therefore, request a business card with a low credit limit that you can repay. Make sure to run the program while paying for things every month and then settle the outstanding balance. The tip is to keep it pretty active for at least a year. You can then ask the bank to increase the credit limit on the card. Why this is important is that even if you don’t get the raise, you’ve probably built on your company’s credit. This reputation is a way to improve your credit and make your business eligible for credit elsewhere.
2. Establish trade lines
Trade lines help keep track of the activity between creditors and your business. Importantly, trading lines contain account information such as the date of credit issued and payment history. It is these reports that contribute to your credit profile that lenders refer to before making loans to your business. However, you can have a business credit report with no trading lines. But this affects your creditworthiness. So you can ask any vendor to report your payment activity. This way, you can boost your low business credit score.
3. Get a business credit report
Business credit reporting agencies are responsible for your credit report. Therefore, see if your business exists on their radar. Also, work with lenders who report their accounts to the agencies to increase your chances of qualifying for credit. In the report you will find your credit score and know the status so that you can improve it more easily if it is too low. In addition, your score will then help you deal with your creditors. For example, you can start paying on time. To get submissions from your lenders that positively impact your business. That’s why improving your credit score and maintaining your report is a critical part of growing your business.
4. assessment of supplier reporting
It is very likely that you will agree with some suppliers to choose and pay at a later date. But do they all report to the credit bureaus? The credit report should guide you through this, even though there are no lists of company names, but the activity on it will reveal something. Keep in mind that companies are not required to report to credit agencies. Therefore, some will and others will not. Although, you should know if your credit habits are working in your favor in building your business credit. If not, you can switch to suppliers who will report to a credit bureau.
Build a relationship with your bank
As an entrepreneur, you know that money really is the lifeblood of your business. Therefore, it is necessary to create a relationship with your bank. It is important that you need information about the loans to which you have access. The bank can also guide you in detail through the necessary steps. All to make sure you don’t miss out on products that can help run your business and build your credit. Also keep in mind that the longer you maintain good relationships with your business partners and suppliers, the more likely they are to trust you. This means that you will grow and run smoothly as you access more funding.
6. Consolidate your debts
If you’re already in debt, consider putting them all under one umbrella. Do this by approaching a credit company that will negotiate with your creditors on your behalf. This debt consolidation process aims to ease the pressure of dealing with too many creditors that you may owe. When considering going this route hoping for it debt management, make sure not to top up your existing loan by getting a larger loan to cover the rest. The agency you approach will negotiate to guarantee lower interest rates and time extensions, and as you pay, improve your credit score.
7. Make a budget
Finally, even if you think you have a general idea of where the money is going and where it is coming from, that’s not enough. Budgeting is very crucial in running your business and finances operational cost management. Plus, a budget is a great tool to help you plan how to spend your money each month. With the organization that it brings, you realize all of your income from all different sources. While it has a record of fixed expenses such as rent, as well as the variables such as machine maintenance, it will reveal to you your company’s spending habits. This way, you can save money and pay off debt to improve your credit score.