How to Improve Your Credit Score for Getting Business Funding
BY: VESELINA DZHINGAROVA ON TUESDAY, JANUARY 24, 2017
When starting your own business, financial problems from the past can quickly get in your way if you don’t make sure that they are swiftly dealt with. If you have a bad credit rating, for example if you have defaulted on loans or credit cards in the past, or even if you’ve only made a couple of late payments, this can stand in the way of you getting business funding. Having too much debt could also pose an issue, even if you’ve always made regular and timely repayments. If you think that credit problems could make things difficult for your company, here’s how to deal with them as quickly as possible.
Get Your Credit Report
Reading your credit report is an important part of putting it right and making steps to improve it. After all, how can you improve something if you’re not sure how bad it already is? Although getting your credit report can be a scary experience if you’re not sure what to expect, having it in front of you will allow you to put a plan together and decide which debts are causing the most issues, so you’ll know which ones to tackle first.
Pay Off Your Debt
If you owe any amounts of money that you can pay right off in one go, this is a good idea as it will reduce your total level of debt and the number of creditors that you owe money to, which will work in your favor. Plus, paying off the rest of a debt right now also means that there’s no need to worry about making repayments ever again.
Don’t Borrow More Money
Unless you are taking out a loan or credit card which you plan to use solely for consolidating your debts, it’s important to make sure that you don’t borrow any further money unless absolutely necessary. If you need extra funding for your business, you might want to try alternative methods such as crowdfunding in order to raise the cash before applying for a loan or credit card.
Although this isn’t always the case, sometimes people find that their credit score is poor due to mistakes that have been made on it, such as a creditor accidentally marking a payment as missed or other human errors. Once you have been able to access your report, it’s vital to go over it with a fine tooth comb in order to spot any potential discrepancies that could be affecting your score.
Keep up Repayments
Lastly, it’s important to keep up repayments on any debts that you are unable to pay off right now. Making sure that you pay at least the minimum payment by the date given every month will keep you in good standing with your creditors and improve your credit score over time.
A poor credit score can easily keep you from gaining business funding from the bank. So, it’s important to do all this in order to look after your personal credit and avoid any business problems.
Image via Shutterstock