Rebuilding a Damaged Business Credit Score
If you have a low business credit score, it can affect your ability to receive funding. You will have limited loan options and will likely be required to pay much higher interest rates than if you had high credit. The good news is that a damaged score is not permanent and there are steps you can take to recover.
1. Make Payments On Time
The first thing that you need to do in order to improve your credit score is to make all of your payments on time. This is perhaps the easiest, and most important, step to improving your score. If you find that you have a hard time keeping track of when your payments are due, setting up payment reminders can help.
2. Consolidate Your Debts
One way to reduce your payments and start getting everything paid off is to consolidate your debts. While this can damage your score in the short term, it will make it easier to make your monthly payments.
3. Determine the Best Order to Pay Off Your Debts
When you have many debts, it may help to focus on paying them off one at a time. If you pay off the debt with the highest interest rate first, it will reduce the amount of money that will be necessary to pay off the entirety of your debts. It may not be the quickest way to increase your credit score, but it will be helpful in the long run.
4. Don’t Add to Your Credit or Debt
It can be a good idea to keep your current credit accounts open, but adding to them can be damaging as it can affect your credit ratio. You should also try not to make any large purchases with your credit while you are working on rebuilding your score.
5. Keep an Eye On Your Score
Even after you have repaired the damage to your credit, it is important to check it regularly to make sure that everything is accurate. If you see any errors, you should report them as soon as possible. They may be negatively impacting your score.
Because your credit score is so important to your ability to acquire affordable financing for your small business, you should do what you can to reduce your current debts and increase your score. Once your score has recovered, do your best to make timely payments and try not to take on any loans that you might have trouble paying off.