If you are a business owner, do you have a business credit? If not, have you heard of it, or considered applying to it? Many business owners, especially startups, have applied for business credit rather than with fixed loans, because they get a lot of benefits from it, particularly the business credit card. But how well your business prospers is based on the credit score your business entails. Do you know anything about your credit score? Have you ever tried checking your credit score? If all your answers are no, you better apply for a business credit now. But before delving into the world of business credit, you have to at least familiarize the key role of what your financial future entails, since many people have just ignored how the credit scores really work, and reflect their ability to get more out of their business.
Each lender get their data about your business credit score from a single source, such as the Fair Isaac, which uses an algorithm to compare your credit report, to other people who have applied for credit, too. From this source, your lenders will be able to decide how much they are going to lend you and the terms they are going to offer to you. The formula they are going to use takes out a single number, hence helps the lenders and banks about their decision to lend you money. The number is your score, also commonly called the FICO score.
For small business owners, having a very good FICO score makes a big difference. While FICO is not the only score to base from by banks and lenders, FICO is usually the one relied on most, and they base their decision based on that score.
How does one small business owner able to boost their credit score? The only way to improve your credit score right away is only possible if all negative information is untrue. If there’s somebody else’s account displayed on the credit report of your business and you eliminate that off the list, in such a way it will improve your credit score quickly. If there are other ways, it will only be small improvements here and there, which will take a while for your credit score to build up.
In order to quickly boost up your credit score, make sure you do the following.
Pay on the right time. This means you have to pay all your bills on or before the date indicated in your bill. One late payment will likely take off a 100 FICO score off your current one.
Pay all debt. By eliminating all the debt that you have made, it will increase your credit score, and in turn reduce the credit utilization. The lesser you use the credit limit given to you, the more your credit score will improve.
Limit your new accounts. This means that every time you open new accounts, there is a small yet noticeable effect on the credit score. Make sure that you keep new accounts to a minimum, including at times when you use it for big purchases like a new car or home.