As a business owner, you might find yourself buried under a pile of debt. However, you should keep in mind that business debt is much more than personal debt and carries stricter terms of repayment as a result. The credit reputation of your business is a very valuable asset and you can use it to determine the credit available to your business from lenders.
This credit availability could influence your company’s ability to expand and make investments in marketing campaigns and equipment.
Here are some steps that you can take to repair your credit:
Contact Your Creditors
You need to get in touch with your creditors and ask them to change your repayment options. Most lenders are clever enough to know that they will receive far less money than you owe when you declare bankruptcy. Because of this, the creditors might agree to restructure your payment options to enable you to avoid this eventuality.
Creditors can also suspend your existing accounts and allow you to repay what you can afford per month until you clear the debt. Others might agree to a settlement offer and close your account for a lump sum payment that is less than your total debt. When negotiating large debts, you should make sure that you speak to high-level managers who have the power to restructure your repayment options.
You should not be afraid to suggest creative solutions such as negotiating a goods transfer to retire your debt.
Create a Time-bound Plan
To eliminate your debt completely, you should consider creating a time-bound plan. Once your creditors agree to adjust your payment terms, you need to dedicate a portion of your monthly income to the repayment of your outstanding loans. You need to focus on repaying your creditors by siphoning money from your income and directing it towards your debt, even at the expense of short-term profits and growth.
Having a positive credit reputation is more important than a short-term profit boost because credit availability will help your business to grow in the long term.
Ask Creditors to Report Account Closures
It is very important for your creditors to report any account closure to credit rating agencies. Although most creditors do this on their own, it is a good idea to remind them. This report can improve your credit profile significantly, which goes a long way towards improving your business credit score.
Ask for Signed Statements of Account Closure
When your creditor closes an account, you need to ask for a signed statement of account closure. Although your credit report might take time to regain its former attractiveness, having documents that prove you have repaid your debts fully will be helpful when you decide to secure new credit.
Once you get rid of debt, you need to start borrowing wisely. You should only take out loans that you can afford and pay down your new debt as necessary. When you eliminate your existing debt, you will take a positive first step towards strengthening your rating over time.
Just remember that borrowing is not a bad thing; the problem is borrowing more than you can afford to repay.
Advantages of credit repair
Are you wondering what the benefits of credit repair are? Here are a few:
- Because credit scores affect your ability to qualify for a loan, credit repair makes it possible for you to qualify for more loans.
- When you repair your credit, you will have a better score, which means that you will qualify for low-interest loans.
- You will get better insurance policies because insurers consider your credit report when giving policies.