How to improve your business credit score
Many business owners find that after the first rush of getting their business up and running that they need to seek out additional financing. However, many times business owners will overextend themselves or misuse their business credit in an attempt to get their business established. This can often result in a less then ideal credit score. Today, it can be almost impossible to get a business loan when you have less then a stellar credit score. This means that if you are a business owner who needs to have better credit you will have to get to work. Here is what you need to know about how to improve your business credit score-
- Know that it takes time-It is important to understand that this is a time consuming process. You won't be able to pull your credit report, fix errors, and then turn around and apply for business financing in a few weeks. It can take time to receive your credit reports, go over them, and fix any problems that you may find. Because of this it is critical that you take the steps necessary to repair your credit score long before you need the additional working capital.
- Know that you are entitled to one free credit report per year-Many business owners are unaware that they are entitled to one free credit report per year. This can not only reduce your cost in pulling your credit reports but it makes getting them even easier. There are many online sites that allow you to order your free credit reports from all three major credit reporting agencies while using only one short form.
- Know that you should pull both your personal and business credit reports-Many business owners feel that they only have to worry about their business credit. However, it is important to keep in mind that most lenders will want to see your personal credit report, as well. A potential lender will want to see how well you are able to manage your personal credit as an indication of how well you will manage the credit for your business. For this reason you should pull your personal credit report too and check it for any inaccuracies or problems that could be on it.
- Know that you should stop applying for credit-Business finance experts stress that the number one thing that you need to do is stop applying for business credit. You should not be applying for any type of credit including loans or lines of credits. The reason for this is that if you are denied it will affect your business credit report negatively. If you have a lot of applications that have been denied this also makes you look like you are not responsibly using the credit that you have. In addition, even if you are granted some more credit it can make your credit score go lower.
- Know that you will have to go over all credit reports inch by inch-Once you get both of your credit reports you need to go over all of it. This can be a tedious process and many people feel overwhelmed by it. However, you need to check to make sure that there are no problems or mistakes on either your personal or business credit report that could be making your credit score low. Studies have shown that a large number of people find errors on their credit reports. You will need to report any problems that you find and work with the appropriate credit agency to get them resolved. With some time, patience, and effort you can improve your business credit score.