Business credit ratings have become more important over the last few years. While they have always been crucial to the success of a business, the recent financial crisis has made managing your business credit rating even more important. Your credit rating will now be used in almost every aspect of your business. Vendors, even ones you currently use, will now review your credit standing periodically to determine if they are going to continue offering you terms on your purchases.
Government agencies offering contract opportunities will now review your credit standings to determine if your company is qualified to complete the contract. They believe if your company has a less-than-perfect credit rating, you will be unable to make purchases necessary to complete the project.
How To Keep Your Business Credit In Good Shape
There are several things that you can do to improve your credit rating or keep your credit standing in good order. Many of these suggestions are also things you could do to manage your personal credit:
• Pay Invoices On Time Regardless of the “grace period” stated on many of your invoices, it is crucial to pay your bills on or before the original due date. While using the grace period may not negatively impact your credit score in a large way, each incident will have a small impact that will quickly impact your credit.
• Watch Balances You want to remain at 35 percent or less of your available credit balance to maintain a good score. While some credit scoring agencies will allow businesses to go up to 50 percent of available without a negative impact, you should try to remain in the 35 percent range. When your debt-to-credit ratio goes to high, the credit rating companies view you as a risk.
• Use Credit Repair Services Many times it takes a “different set of eyes” to see a problem in your finances. You may believe that everything you are doing should have a positive effect on your credit, but your score remains low. A professional agency using business credit repair software can help you manage your debts in a way that will improve your overall credit rating.
• Go To Auto Pay Bills that can be automatically deducted from your checking account each month should be enrolled in auto pay. This simplifies your bill paying process, guarantees your bills are paid on time, and helps you improve your credit rating with little effort.
• Overextension Is Bad Yes, it may seem like a great idea to have accounts established with every provider in your area under the pretense of always being able to get supplies, but this can also impact your credit. As more vendors pull your credit record before establishing an account, or randomly check your record while you are their client, the more inquiries are posted to your credit record. Just like personal credit reports, every time your credit report has an inquiry placed against it, your credit score will drop a few points. If you have an excessive amount of vendors, you could possibly have an excessive amount of inquiries.
Little steps like these can make a huge difference in the success of your company. Sadly, business owners involved with every other aspect of their company often forget how important managing their credit standing can be to their success.
Author Catherine Stephens is a small business consultant and offers this article to help college student avoid heavy debt load. DebtPayPro is one of the best providers of business credit repair software systems within the finance industry. These important tools will help your lender to determine eligibility and assist them in doing necessary common repetitive actions faster and more accurately, which is important when it comes to your financial history.
Photo credit: http://www.flickr.com/photos/andresrueda/3274955487/
