In order to grow and expand your small business, you’ll need the capital to do so. Borrowing money is a way to have working capital readily available to assist your company’s operations and encourage expansion. Securing a loan is not always easy because it is conditional based on your company’s credit score. A credit score that is too low may put you at risk of never securing a loan.
Keep reading to learn how you can improve the credit score of your small business:
Low Credit Usage – The easiest way to improve your credit score is to keep your debt levels low. The less credit you utilize, the higher your credit score will be. If you have too much credit that is being utilized, try to make several payments during a normal billing period to lower that credit line. Also, avoid using one line of credit for all purchases because too much debt on one business card can show lenders you are an irresponsible spender.
Limit Opening & Closing – Opening new lines of credit can have a small negative effect on your credit score. Opening a few different accounts at once can lower it significantly. You’ll want to avoid opening any new accounts if you’re going to be making big purchases in the future, like real estate or automobiles. Closing accounts can also negatively affect your credit score. It is better to have multiple unused accounts open than to start closing some of them. If it is necessary to close any accounts, make sure you close the newest one with a positive payment history. Even though the account will be closed, the history of that account will remain with you for the next 10 years.
Pay on Time – Make a habit of paying all of your payments before the due date. Missing one payment could lower your credit score significantly if the lender chooses to report you. Making late payments can also result in late fees which can add to your debt levels. Paying off the entirety of your debt may make your credit score dip in the beginning, but in the long run it can be good for your credit score. Can;t pay off your debt as quick as you’d like? Try asking your lender to raise your credit limit to improve your debt-to-equity ratio.
Constantly Check In – Now that you know how to keep your credit score up, keep tabs on it. There may be small errors that appear on your credit report that can be corrected to keep your credit score from falling. Constantly looking at your score and knowing where you stand will significantly help you in the climb to raising your credit score.
For even more information on how to boost your business’ credit score click here.
Taking control of your borrowing and spending habits now can save you from a future of restricted cash flow that will inhibit your small business from expanding. If your current credit score is preventing you from securing loans, contact RMP Capital Corp. We have more lenient qualifications than a bank and can help you get the cash you need now. For more information, visit our website or give us a call at (631) 738-0047 today!