Although most of us generally know how our personal credit score works, our business credit score is often a little more of a mystery.
For those unfamiliar with this particular metric, the good news is that the business score is actually fairly similar in how it works and what you can do to make it go up or down.
Your business credit score also has the same function as your personal score: it’s a figure that indicates your company’s history of payments, its debt load, and its general financial history. It can be looked at by potential lenders who will consider your score and general financial details. If they decide it’s acceptable, they’re likely to loan you money, assign you an interest rate or a credit line.
Actions that can affect your business credit score can include:
- Payments. Are you paying every a certain amount every amount month? Or do you sometimes pay more when you feel like it, less when you don’t? Regular payments can go a long way in showing a clear history.
- Multiple credit lines. Potential lenders may not necessarily like seeing maxed-out sources of credits from all sorts of providers. But they may enjoy seeing that your business has been able to receive credit from several sources and they are all paid off or a few have a low balance.
- Discuss better options. If a balance seems higher than you like it to be, you also may approach businesses owners to discuss some other options, such as lowering the due amount. In general, a company would be happy to get some of the money owed, rather than wait a long time for all of it or wait a long time and see a company declare bankruptcy.
- Focus on paying less. Make debt reduction a company goal and look for ways to pay more than the minimum.
- Try again later. If a company declines your loan request, consider returning in the future once a certain amount of time passes, debt is lower and some challenges may be solved.
For more financing strategies contact Nations Capital Financing.