Business credit score is very important, much more for business than for personal accounts. Businesses generally need credit more than individual lenders, because of the relatively high amounts that enterprises have to deal with every day.
A low credit score for a business can mean its death. You may find that you need to expand your capital, but you’re unable to do so because of outstanding credit or debt. You could try raising cash through investors, but these people do their due diligence as well.
Some may be put off by outstanding credit or a low credit score, which affects your business’ ability to build additional capital.
As early as now, you will want to know how you can build credit score, instead of regaining it. There are several effective techniques to achieve that, and we’ll look at three that you can start working on.
Make Timely Payments
There’s no better way to impress your creditors than making timely payments. This gives you the image of being a committed client. After all, that due date is what you agreed on in the contract.
A very important fact – your payment history accounts for more than 30% of your overall credit score. Make it a point to pay on time. It helps more than just your credit score too. You could suffer less anxieties from creditor calls, and you get to enjoy peace of mind.
Settle Debts Strategically
When you pay your debts, you should do it in a manner that actually helps you save money. When it comes to debts, the expense part is in the interest rate. It is this rate that compounds the amount of money you owe, and how much you will need to pay every given period.
Thus, it makes sense that you settle those debts with high interest rates first. They may be a bit heavier on the pockets than those with low amortization, but they also take the most out of your cash flow.
Settling those as early as possible will take the strain off your business’ finances, plus it gives creditors the impression that you are in a much healthier financial status than they gave you credit for.
Maintain an Open Line With Your Creditors
Business can run across hard times too. Communication is key in this case. There are creditors that are willing to come to a compromise with you with your payments if you’re able to present to them that your business is currently on rocky ground.
Don’t be afraid to negotiate, or re-negotiate your payment terms. Remember, these creditors directly report your payment history to the monitoring agencies. If you can come to an agreement with them that benefits both parties, you could save your credit score until at least the time that you can recover.
Of course, don’t forget to continually monitor your credit score. If you’ve settled a loan but the creditor has not reported it as closed, it can negatively impact your credit standing. It takes no more than a few minutes to access the report, verify it and report if there’s a need to dispute.
Building a business? Build your business credit. Read on to know more or send us a message so we can help you build your business in Thailand.