In today’s tough business climate and even tougher credit world, it is easy to get bad credit and hard to run your business without great scores. However, there are a few ways that you can rebuild even the worst credit score and get your business back on track. Here are four proven strategies that will help you to get out of this hole and stay out.
1. Settle Your Debts
Every month that you have unpaid bills and debts, there will be new negative information added to your credit report. Because of this, it is important to deal head-on with the issue of negative credit report information. If you have bills in collections, call and make a payment plan. Consider taking out a loan to pay debts and start fresh. If inaccurate information is bringing down your credit score, contest it. Even the smallest bits of negative information add up to a lower score.
2. Open New Credit Accounts–But Just a Few
Many business owners have poor credit because of credit cards, so they are reluctant to open a new account and repeat the cycle. However, using credit wisely is the most effective way to rebuild your rating.
While it is difficult to get a new credit account with bad credit, consider a gas card, a secured credit card, or other options that are more lenient about scores. There are also credit card companies that cater to individuals and businesses with bad credit, but you should carefully look at the terms. Many have high interest rates or annual fees that will be difficult to pay. Once you have opened an account, use it judiciously and pay it off every month; each payment made on time will have a positive effect on your credit score.
3. Build New Habits
Many businesses get a bad credit rating by having bad habits. Habits like over-leveraging your business, buying things you can’t afford, and not having a set payment system will quickly tank your credit score. Make a plan to charge only what you can pay that month and to pay on time. If you take a loan, make sure it is affordable and that you have a system for ensuring it is paid on time every month. These good habits will keep your credit score high for a lifetime.
4. Take Out a Bad Business Loan
If you cannot get a credit card and bill collectors won’t stop calling, there are other options. There are businesses, such as AFN, that offer loans for businesses with poor credit. You will need to meet certain criteria, but these loans can help you to rebuild your score to a healthy number while paying off debts and investing wisely in your business.
Rebuilding bad business credit is difficult, but not impossible. Use these four strategies to get the high credit rating that your business needs to be successful in a competitive world.