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How To Improve Your Business Credit ScoreYour business credit score is important. Don't believe me? Ask any business owner who tried to get a business loan that had poor credit. A credit score of 700 or better is needed to be approved for business loans. Thus, if you do not have this credit score, you should make your goal to improve your credit, and start working towards that now! Why? Your credit score should be taken seriously, as to lenders it is your financial snapshot, it shows your financial health at a given moment. So if your score is not where you want it to be, you better work to improve it.
How do you improve your business credit score? 1. Know what it is: 2. Give Yourself Time: Another thing that time does is help your credit by giving you extra credit history. One tip is do not close unused credit accounts. Your credit history is an important factor in your credit score. So, even if your card, or line of credit is at a zero balance, don't close these older accounts. If you do they may not show up on your credit report, and this makes you appear as a new borrower which is not necessarily good. Keep the old accounts open no matter what the interest rates are but keep the balances to a minimum. For example, if it is a credit card with an interest rate of 12.9% you would not want to have a big balance as the interest might kill you, but leaving 20-100 dollars shows a current thread of credit. 3. Don't Bite Off More Than You Can Chew: Another great way to improve your business credit score is to spread payments out over a few cards. This may be a pain for you, but it means that you can change your debt-to-credit ratio, which can lead to an improved credit score. To do this, transfer balances from cards that are nearly maxed out to others with lower balances. Establish credit card balances in a 20-30% range which should increase your debt ratio and score. This works because while you won't be saving money, unless you transfer to a card with a lower interest rate, you'll make increased payments on some cards and reduced payments on others. 4. Communicate: Your best option when you are struggling to make ends meet is to call your creditor and tell them the situation, then ask them to extend the deadline for payment and to change the payments amount to something you can afford. While this means a longer time to pay off, and more interest, and you can probably expect to pay a "carrying charge" or higher interest on overdue accounts, you don't ruin your credit in the process. The sooner you act, the better terms you are likely to get, and the more flexible the creditor will be with you. Improving your credit is important, so take these steps to get your business credit score where it should be. |
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