7 Tips to Repair Business Credit
When you own a business, your credit can be a useful tool. However, if you have a history of bad credit, it may end up becoming an obstacle instead. A low credit score can make it difficult to acquire a loan and can result in high interest rates and unfavorable terms when you do get one. The following are some ways that you can repair credit.
1. Keep Your Business and Personal Accounts Separate
You might think it’s convenient to just use your business and personal finances together, but this isn’t a great idea. If you have bad personal credit, this can affect your business. It can also cause problems if your business is ever in financial trouble.
2. Open Some New Accounts
It might seem counterproductive to open a new account if your credit is already bad. However, this can actually be helpful. It can help to increase your score by improving your debt-to-credit ratio.
3. Reduce Your Debt
If you have a lot of debt, even if you do everything else right, it can still negatively affect your score. You can repair your credit more quickly if you work to reduce your debt percentage.
4. Use a Secured Bank Loan
Acquiring and repaying a loan can help to improve your score over time. However, if you have a bad credit history, it can be difficult to do this. A secured loan will be easier for you to get since it requires some form of collateral.
5. Make Your Payments On Time
Try to make all of your payments on time or early. Good credit relies on this, and making late payments will inevitably lower your score. You might consider setting up automatic payments if you have trouble with this.
6. Negotiate With Lenders On Past-Due Accounts
If you are behind on payments, this can decrease your credit score, but negotiating with your lender may be something worth trying. In some cases, they may be willing to restore your account’s good standing if you make a certain number of consecutive on-time payments.
7. Add Positive References
Supplying a credit-reporting agency with positive references can sometimes help to improve your score. These can include business partners, suppliers and vendors that your business has had good experiences with in the past.
Because it can either benefit or hinder your business’s growth, you should take these steps to repair credit when necessary. It can be a slow process, but the progress you see over time will be helpful.