Know how business credit history can be strengthened

Many people are not aware of how credit scoring system works and also how credit scores can affect you financially. One will come to know how bad is their credit score if his loans and credit card applications gets denied. Coming back to basics, a credit score is a three digit numerical number which helps the lenders to identify who will pay on time and who will not.

Your credit report is a report reflects your entire credit history, how effectively you have made payments, how many times you have defaulted on payments, and many other factors.

This does not end here if you own a business; your name can also be reflected in the credit report of the business. A Business credit report is a tool which is used by the lenders to grant credit to the business.

 Business credit also works same as that of the individual.

Below are points which should be taken care of when it comes to Business credit history:

Payment History: It tracks the records of payment of debts on time. A history of prompt payments of at least the minimum amount due helps your score. Late or missed payments hurt your score.

Length of Credit History: It refers to how long you have had and used credit. The longer your history of responsible credit management, the better your score will be because lenders have a better opportunity to see your repayment pattern.

Type of Credit: Credit cards, retail accounts, instalment loans, finance company accounts and mortgage loans. You do not have to have each type of account. Instead, this factor considers the various types of credit you have and whether you use that credit appropriately

Avoid making multiple credit applications: Opening multiple credit card applications in the hopes of getting discounts or expanding your credit needs can be detrimental to your business credit score. The more applications you make, the more creditors will run credit checks

Transfer your balances: Managing multiple credit cards can be difficult, but to acquire a high business credit score, there are a few things you should consider. Try to pay off balances on your cards, consider transferring balances to the card with lowest interest rates.

Keep your financial statements up to date: Financial statements won’t directly affect your business credit score, but when seeking and evaluating credit options, lenders will check your claimed revenue against actual revenue, and any discrepancy could have an effect on your credit limits.