These Tips Can Help Small Business Owners With Bad Credit
Opening a small business requires a lot of hard work. Unfortunately, that work can be undermined by bad credit when you head to the bank for a loan. Bearing in mind that this problem goes with the territory when you open a business, follow these tips to repair your credit and get back in good standing.
Keep a Clean Record
Your business’ private spending is not the only thing taken into consideration when calculating a credit score. While it may seem counterintuitive to make the first step on your way to better credit unrelated to spending at all, it is important not to get tunnel vision. Being sued by debt collectors, declaring bankruptcy in the last ten years, and having a judgement made against you all go on your public record and are therefore factored into your credit score. Monitor these records and avoid situations that give you bad credit.
Pay Down Debt Automatically
Late payments are brutal for your credit. Consider setting up automatic payments with your loan or credit card company. As long as your business account has the appropriate funds when the payment is due, you never have to worry about being caught off guard by a bill again. In addition, many credit card companies are eager to incentivize automatic payments, so be on the look-out for bonuses when you sign up.
Work With Your Supplier
If your business purchases raw materials from a supplier, that relationship can come in handy when you’re repairing bad credit. Establish a trade line with your supplier and ask them to report the payments you make on your purchases to a bureau. If you are able to maintain your agreement with your supplier and make payments in the days or weeks after purchase, those reports can be a valuable stepping stone toward good credit.
Consolidate Your Debt
Debt consolidation is a serious move, and you should consider carefully before taking this step. If you do follow this tip and then max out your credit cards, you are in a worse position than before. However, if you think your business can handle the steady installment loans, this is a great option to lift yourself out of debt and improve your score.
It is easy to give up your dream when bad credit stands as a roadblock to your next step with your small business. But by being smart with your money and taking calculated action, you may be able to recover and thrive.