When your business has a good credit score, more opportunities become available. Your business can get access to lines of credit with higher limits, receive client financing options from vendors, and get better financing to promote growth if your credit score is good. But for new businesses that may not have the established financial history, as well as established businesses that may have less-than-perfect credit, there is an easy strategy to conquer the credit score and get and stay in good standing.
Step 1: Look at your detailed credit report
Many businesses only look at their credit reports right before they apply for financing. The truth is that credit reports should be reviewed regularly to make sure there are no lingering balances that have already been paid, and to make sure there are no errors. Credit reporting agencies are gigantic organizations, which means that every once in a while there are errors, which is why it’s important to go over your detailed credit report every few months – if not more frequently. Keep in mind that any changes you make to your company’s credit history will not show up for at least another month, which is why keeping on top of your business credit score is important even if you are not seeking financing.
Step 2: Research your vendors and suppliers
While many vendors and suppliers offer special financing to businesses, not all of them report information to the large credit reporting agencies. In other words, if you are making business purchases from a supplier and are on time with all of your payments, but they are not reporting that information, your business credit score will not improve. Always ask your vendors and suppliers if they report to credit agencies so your excellent purchasing and payment practices help improve your credit score.
Step 3: Preserving your business credit score
Preserving your business credit score does not mean you have to go without spending or getting financing. Traditional debt-based loans and financing that secured through collateral is what impacts credit ratings. Fortunately, there are alternatives to traditional loans designed specifically for new and small businesses that are trying to preserve and improve their credit scores. A merchant cash advance, for example, provides working capital without placing debt on the books or impacting credit. This is a good fit for businesses that need financing with flexible payments. Similarly, an unsecured line of credit provides a reliable source of working capital, and is available for both new and existing businesses. Unsecured lines of credit do not require any collateral, and you can use them for anything your business needs. As you pay off the balance, the information is reported to credit agencies, so you can improve the credit score of your business.
Nanaki Capital provides merchant cash advances and unsecured business lines of credit to help entrepreneurs conquer the credit score. Contact our offices today to get the business financing you need.