If you own a small business, you’ve probably considered how to get funds to expand it. Even if you were lucky enough to start your firm with your own assets, you may eventually want more money to further expand your business.
Business credit scoring is one of the fundamentals of business ownership. A business credit score is a number that shows if a firm is a good candidate for a loan or to become a business client. A good credit score allows you better access to business banking tools, loans, partnerships, etc.
What is a business credit score?
Credit scoring firms calculate business credit scores based on a company’s credit obligations and repayment histories with lenders and suppliers, legalities, bankruptcies, business type and size, how long the company has operated, and repayment history of previous loans.
How does it affect your business?
When a firm requests for a loan, the lender will consider the company’s credit score. It would also consider the company’s income, earnings, assets, and liabilities, as well as the collateral value of the intended to purchase with the loan. Because small company owners’ personal and corporate finances are typically intertwined, lenders may examine both the firm’s and the owner’s credit score in the case of a small business. You may negotiate better deals with lenders if you have good credit. In the absence of a business credit score, you must have an excellent personal credit history to qualify for a small business loan based on it alone.
How to maintain a good credit score?
Some ways you can improve your business credit score are as follows:
1) Pay your bills promptly
Failure to make timely payments may ruin your credit and the credit rating of your business. Making late payments on your bills can have a negative impact on your credit history, especially if the creditor decides to report you. Paying your company’s bills on time is not only a sensible business practise that will raise your ratings, but it will also help you maintain good relationships with your lenders.
2) Check business credit score report frequently
Many company owners are unaware of their organisations’ credit scores. It is important to review your company’s credit report on a regular basis in order to avoid inaccuracies and inconsistencies that might result in a decline in your credit score.
3) Correct any errors
Even little errors or omissions, such as supplying the incorrect address, can have a big influence on your company’s credit rating. Any error on a credit report, no matter how tiny, should be remedied as soon as possible through corporate credit repair.
Where can I check my business credit score?
There are many services such as Experian, Nav, and Equifax that offer businesses the service to check their credit score. In Malaysia, CTOS Credit is a popular option for checking both business and personal credit scores.
Maintaining a good business credit score makes it easier to receive financing when your business needs it. Even when it comes to insuring your business, a good credit score allows you to enjoy lower policy rates. It is possible for you to borrow large amounts with the least hassle, as long as your good credit score is maintained. So don’t hesitate to go through a regular company credit check – it will only benefit your business in the long run.
For more information on business financing, check out our blog.
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