When running a business, there are so many things to consider. From your profits to your expenses, the list goes on and on.
Lots of business owners sometimes need a little extra cash when times get tough, and it can be hard to come by. When you’re dealing with your personal finances, you may look at payday loans from a direct lender to help see you through.
But when it comes to your business, your options may be a lot different. Business finance often requires you to have a good business credit score, and if you don’t have one, then you may struggle to be approved.
So, keep reading and find out how you can make a start at maintaining good business credit.
Pay Your Bills On Time
One of the best ways to keep a good business credit score is to always pay your bills on time.
This means if you have to automate them so you don’t forget, then do it right now! Every late payment will cause a blow to your credit score, and you’ll then have to work hard to undo the damage.
If you miss the payments because they all come out at the end of the month when your finances are low, contact the providers and ask them if you can change the date to something that suits you.
Most of the time they’ll be more than happy as it means they’re more likely to get their repayment on time.
This way you’ll avoid lowering your credit score, the providers will receive their money, and you’ll actually increase your credit without doing anything.
Always Have Enough To Cover Your Bills
As well as paying your bills on time, you also need to ensure that you have enough cash in your account to cover the payments when they do come out. If this means you have to have an overdraft just in case, then so be it.
It’s always better to ensure that a bill payment comes out rather than bounces back because you don’t have enough funds.
Every time this happens, your credit score is damaged, so you want to avoid this from occurring as much as possible.
Make Use Of A Business Credit Card
You might think that debt will instantly give you a bad credit score, but this is far from the case.
Having a business credit card can actually help you improve your credit score over time.
A lot of businesses use them purely for this reason, and it’s very easy to do so. All you need to do is make all your usual payments but do them on your credit card.
Then you pay it all off at the end of the month using the untouched money in your bank account.
This instantly helps build a good credit score as it shows you’re a responsible spender and can always pay your debt off on time.
So, don’t be fooled into think debt equals low credit. In fact, it can really help boost it!
Check Your Score
It’s also vital that you know what your score is on a regular basis. Just because it was high three years ago, doesn’t mean it still is now.
It’s recommended that you check your credit score once or twice a year so that you can make improvements when needed.
It’s also beneficial to know how your credit is doing so that you don’t apply for finance that you definitely won’t get.
For instance, if one of the criteria is that you need a certain credit rating and you know that yours is below that, you’ll be able to avoid applying and causing any further detriment to your score.
So, make sure you keep a close eye on your business credit, and you’ll find it much easier to manage.
Don’t Overapply For Finance
When you apply for finance, some lenders will run hard credit checks on your business, and too many of these can actually harm your score.
Making too many applications in a short period of time is also bad because it shows up on your history.
This could then demonstrate to a lender that you’re always in need of financial support and may not be able to pay back your loan on time. It’s always best to seek out a quote first rather than actually applying.
This way you’ll be able to avoid too many rejections, hard credit searches, and applications.
You should apply for finance if you need it, but make sure you properly research the criteria first so you can give yourself the best chance of approval and prevent you from having to apply for lots of different ones.
Have A Business Bank Account
One of the most important ways you can maintain your business credit is by having an actual business bank account.
If you have all of your business transactions going through your personal account, all you’ll be doing is building up your personal credit instead.
There are lots of financial institutions that offer business only bank accounts and you should really take advantage of them.
Along with building up your business credit, they also offer things like higher overdrafts, good interest rates on savings accounts, and even lower costs on transactions.
These things can be super beneficial for your business, so you definitely don’t want to miss out.
Having a good business credit score isn’t hard to achieve when you take these tips on board.
As long as you pay your bills on time, use the appropriate banking for your business, and keep an eye on your score, you’ll find it so much easier to maintain.
You’ll no longer be confused when you get rejected for finance, citing a low score as the reason, as you’ll know what it is before applying.
So, don’t let your low business credit get you down and make use of these tips. You’ll soon see the difference and realise how easy it can be to maintain good business credit.