5 Ways to Keep A Good Record of Business Credit Score
A bad credit score never shows any business firm in a good image. As an entrepreneur or business owner, you can give your business a good reputation if you can maintain an excellent business credit score rating. Basically, a business credit score provides an insight into the credibility and reliability of your business.
When a business possesses a credit score which is above par, it has more chances of getting a loan to facilitate growth and development. Various banks will be more than willing to lend such business funds to finance its operations. Also, having a good business credit score gives the CEO the leverage to negotiate the lending parties' interest rate. Or better still, you'll be in a good position to request loans with the best rate and pay lesser finance charges and insurance policy rates. In short, a good business credit score opens a pathway to a plethora of financial assistance. Thus, you need to monitor your business credit score.
A poor credit rating is never good for business. To the investors and potential lenders, they will view your business as a high risk. Hence, endeavor to improve your business credit score and keep the scores as high as possible. However, how do you recognize a high credit score, fair credit score and low credit score? And more importantly, what is their specific implications. To know this, kindly read further.
Creditscan Credit Score Standard
Creditscan is a business credit agency that assesses businesses and provides a credit score. For instance, Creditscan Malaysia is exclusively developed for businesses in Malaysia to provide credit solutions for various organizations and enterprises. Dun and Bradstreet are responsible for the development of the popular credit bureau portal. Below is how Creditscan scores business on a range of one to six based on risk.
- Low Risk (1 - 2):Any business with a credit score ranging from one to two is considered as low risk. Investors and lending organizations are more likely to provide funds or loans to such businesses. In other words, these firms have a better chance of getting credits at a competitive rate.
- Average or Fair Risk (3 - 4):Here, a business credit score between three and four is neither excellent nor poor. Such a business can get approved for credit but not at a competitive rate.
- High Risk (5 - 6):If a business holds a CreditScan score of five to six, then lending parties will consider the enterprise as highly risky. A business group with poor credit score have to pay to get approval for credit. In several cases, they hardly get credit approval.
How to Improve Your Credit Score
If you realize that your business falls into the high-risk credit score category, improving the credit score should become your next priority. And luckily, there are some effective methods to change your credit rating from high-risk to low-risk. The methods are as follow:
- Always Pay Bills as At When Due
- Maintain A Low Debt Level
- Monitor your Business Credit Report
- Play the Rules of Credit
- Refrain from Credit Account Closure
If you want your business to gain some good credit reputation, then you should start paying your bills on time. Advisably, you can put payment date on your reminder if you tend to forget. By so doing, you can easily pay earlier and improve your credit record.
When you limit your credit usage and owe less, you are less likely to dent your credit record. By maintaining a low debt level, you will have some grounds to improve your credit rating.
Regular checking of your business credit score is important. By so doing, you can easily correct mistakes and avoid errors that can prompt a credit score decline. Also, when you monitor your credit report, it'll help put your credit usage in check.
Several financial experts agree that using credit can help improve your credit score. Here is how: If you open one or two business credit accounts and adhere to the rules with regular due payments, you'll lift your credit score from poor to fair gradually. And if your credit score is fair already, then your business credit score will be heading for excellent.
While this decision is common, it is an uninformed one among small-scale business owners. After paying off your debt, you don't have to close your credit account to stop future spending. Instead, you should keep it open and maintain a good credit practice. Closing off your account will do more harm than good to your credit score.
Conclusion
Undoubtedly, a good credit score is important to any business group. Aside from being eligible for loan opportunities, it presents your business in a good image to investors. With a good business credit score, you can easily eliminate dependency on personal finances and raise your borrowing power. So, keeping a good business credit score should be one of your top priorities as a business owner. You can learn more about business score here or contact us for private consultation.