Skip to main content

5 Expert Tips To Improve Your Small Business Credit Score

 


Credit agencies assess the creditworthiness of business organisations and assign scores to help lenders make better decisions. These credit scores capture multiple aspects of an organisation's credit history: repayment records, the debt amount, types of credit instruments, etc. When business owners apply for business loans, lenders evaluate credit scores to determine their eligibility and credit worthiness. If you/your firm has a high credit score, you are more likely to get favourable loan terms and options. On the other hand, a lower credit score can lead you to shell out more interest while repaying your loan. You can often get bad credit business loans. However, it is better to boost your creditworthiness to land better deals. Let's break down the expert tips to improve your small business credit score! 

Why Is Your Credit Score Low?

Different credit agencies have varying criteria to ascertain your creditworthiness. But in general, one’s  credit score tends to be low when the following happens:

●      The firm makes a delayed payment.

●      The organisation has recurrent records of defaulting on loan repayments.

●      The business files for bankruptcy.

●      The business applies for several loans and credit cards within a short span.

The above scenarios indicate that the organisation is struggling with financial issues. As a result, lenders are wary of lending money to them. They charge higher interest or set stricter terms to cover the risks associated with bad credit loans.

 

Tips To Boost Your Business Credit Score

When you apply for a small business loan, lenders evaluate the firm’s financial records and credit history. These expert tips can help you make a positive impression and enhance your credit score!

1.     Separate Personal and Business Loans: Many small business owners use their personal credit cards for incurring business expenses in the early days. However, this practice can prevent your business from leveraging the benefits of a stable credit history. A longer credit history for your business can help the firm achieve higher credit scores.

2.     Ensure Timely Repayments: Paying loan instalments on time can go a long way toward improving your business credit score! Repayment records can influence the final score. Hence, you must remain consistent in making timely payments. You can set reminders or establish direct debit systems to ensure you do not miss any payments.

3.     Cross-check the Accuracy of Your Business Credit Files: An organisation's credit file includes details like name, address, credit enquiries, total debt, and similar details. Even small, innocuous mistakes in these records can prove costly in the long term when lenders evaluate your details. Hence, you should regularly cross-check your credit files and apply for corrections wherever required.

4.     Minimise Credit Inquiries: While a healthy debt level is good, applying for too many loans can spell trouble. When you apply for business loans, your credit file reflects the same. You should minimise the number of credit enquiries to maintain a higher credit score.

5.     Establish Credit Lines with Vendors: If you have regular suppliers, you can establish credit lines with them. Regular repayments to these stakeholders can help you bolster your credit score without racking up unhealthy debt. 

If you want more guidance and help applying for business loans, contact the team at Broc Finance today! 

Source: https://www.brocfinance.com.au/blog/5-expert-tips-to-improve-your-small-business-credit-score/


Labels:
Location: Australia

Comments

Post a Comment

Popular posts from this blog

Why Choose Commercial Finance Brokers Instead of Directly Going to the Lender

  Every business strive to grow and need finance from time to time for capex or working capital purpose. For this, they require financing options. The conventional way would be to go to a bank or any other traditional financing institution. But there is a drawback! Traditional financing has stringent assessment criteria and requirements which may all the businesses may not be eligible, especially small businesses.   Owing to this, business owners are now exploring alternatives for securing the finances needed to help their businesses prosper. This is where commercial financial brokers come into play. A commercial finance broker has access to multiple bank and private lenders offering a suite of business loan options to get the right solution for your business. Here we present three reasons why choosing a commercial finance broker is beneficial for you rather than directly going to the lender.   1. The perfect match - In the world of finance, there is no “one fit suit...
Post a Comment
Read more

UNDERSTANDING THE INTRICACIES OF BAD CREDIT BUSINESS LOANS FOR ENTREPRENEURS

  Business financing is a challenging domain to navigate. Your eligibility for loans depends on many factors and business owners have to meet complex requirements to get financing for their firms. One of the top concerns while looking for business loans is the entrepreneur's credit score. If you or your business have a history of defaulting on loans, you may find it hard to get a lender. If this happens, bad credit business loans can come to your rescue. An experienced finance broker can help you get these loans on terms that suit your needs. Let’s break down the concept of bad credit loans!   Bad Credit Business Loans: What Are They? Business owners need cash to keep their firms running. However, many entrepreneurs struggle to secure loans because of poor credit scores. That is where bad credit loans come in. These loans can help you infuse cash into your business operations on short notice. These are short-term financing sources that help businesses stay afloat in tim...
Post a Comment
Read more

When Can a Person Apply for Low Doc Business Loans & What are the Benefits?

  Documentation is one of the crucial aspects of loan approval. People unable to provide the necessary documents can get a rejection on their loan applications. But that’s the traditional way. If you approach financing options through a finance broker, even with minimal documentation you can access easy financing solutions.  Low doc business loans  are very much a reality; maybe not in traditional banking, but you can acquire funding through a finance broker from a private lender.   Understanding Low Doc Business Loans From sole traders and proprietors to SMEs, anyone can apply for low doc loans. If you are a business owner in urgent need for financing, you can apply for it, especially if you have existing documentation constraints. When you are busy expanding your venture it can be hard to keep track of all the financials. For new businesses, it is even stricter since they have not been trading for long. In these circumstances when you are in a tight spot du...
Post a Comment
Read more