If an individual credit score is important, a business’s credit score is essential. Unlike individuals, businesses need to borrow money on a regular basis. The way the industry works is that money is often tied up in other areas of the company. As such, most businesses need a short-term loan to stay solvent. A bad credit rating stops any business from running to the bank for help. As an SME, you will rely on lenders more than most businesses. For that reason, you need to work hard to keep your credit rating high.
Hire An Accountant
Your company needs a professional to handle the credit. Your credit rating goes off how well you manage your finances, which is why an accountant is important. Most accountants know how to manipulate cash flow so that they hit every brief. When they hit the brief, the lenders don’t look down on you because you score remains high. The odds are that you aren’t a master of numbers. It is fine to admit as most people aren’t masters when it comes to math. What you have to do is accept the reality and act fast.
Pay On Time
The simplest way to maintain your credit is to pay on time. The later you pay your bills, the worse it looks on your report. Lenders use your past financial history to judge the future. A couple of late payments show them that you have a problem with punctuality. To them, that is a massive risk because it could escalate out of control. Paying on time, however, shows them that you know how to organize your finances. A business that can do that is one that will never struggle to secure additional finance.
Lenders hate businesses that are opaque. And, you best believe that the majority of them are opaque. Some of them have good reason to be so as they are the leaders in their field. As such, they don’t want to reveal the secrets that keep them on top. However, most businesses do it to hide dodgy dealings and suspect transactions. A firm that has a SOC 3 compliance certificate, then, will go a long way in the eyes of the lenders. SOC 3 is a verified document that gives a business greater transparency. That makes it easier for external sources to see what is going on behind the veil. All this adds to the trust element – lenders can trust that you are not up to anything dishonest.
Open New Lines Of Credit
How many lines of credit do you have? A single line reflects poorly on a credit score, which is why you need multiple lines. Just like paying on time, it shows the lenders that you can organize your finances. The more you have, the more likely you are to raise your score. Only do this if you know you can handle the pressure, though. Many businesses have made things worse by adding extra lines of credit.
Every business needs to take its credit score seriously, especially a small one.