In the eyes of all private lenders and banks, your credit profile is the single most important thing about your business. Lending agencies, including traditional banks, judge your business on the basis of the kind of credit profile you have maintained. If your credit profile doesn’t show a promising sign of your business, no lender would want to be associated with you.
Now that we have talked about the perils of a poor business credit profile, you would obviously want to know of ways which you can follow to improve your credit profile for the better. As a business owner you realize that you can feel the need for a loan at any given time. When it comes to such a position it is necessary that you take your business credit profile into perspective and improve it beforehand, rather than regretting later.
Here we mention some of the tips you can follow for improving your business credit profile:
The repayments you make on a loan dictate the kind of business credit profile you have. Your credit score is calculated on the basis of the repayments you make on the loan you have. If you’re making your repayments on time, then your credit score would be good. But, if you aren’t making your repayments on time, you would fail to have a decent credit score. This is because your lender would obviously report your credit history to credit reporting agencies.
If you make good repayments, you can eventually turn the picture around and make your credit score better. This is why we mention you should always be on the lookout for small business loans or merchant cash advances with easier repayment plans.
Increase Credit Limits
If you’re looking to improve a poor credit score, you should look to improve the credit utilization ratio. Credit utilization amounts for around 30 percent of the computations involved while computing your credit score.
You should talk to your credit card providers to increase the credit limits on the card they have given to you. If you’re able to increase your credit limit on multiple cards, then your credit score would take a major boost.
Credit utilization is determined by just how much of the total credit you have on offer is used by you. A business using 80 percent of their total credit limit would have a poorer credit score than a business using only 20 percent of their total available credit.
Record Good Payments
While lenders are quick to record a poor payment history, they don’t really record good payments. You should make sure that your lender records the payments you make in time as well, so that your credit score is able to recover.
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