Managing your Business Credit Score
Credit scoring for businesses works much the same way as it does for individuals. In fact, many of the same factors come into play when determining a company’s credit score as for an individual. There is, however, no actual crossover between them. In other words, having a sparkling personal credit rating will not do anything to make a business’ credit rating look any better or vice versa, however, as you’ll see further on it can have an impact. Here are some quick tips for making your business more attractive to lenders.
1. Businesses have credit reports too
Get yours and check it regularly. Basically you’re looking at much the same points as for your personal credit score. You’re also looking to ensure that all details are correct and that any mistakes are rectified promptly. This goes for even minor mistakes.
2. File your taxes on time
Frankly the most important reason for doing this is that the Inland Revenue are the last group of people with whom you wish to have any problems. The fact that it also looks good for your credit score is just an added bonus. If your business status requires you to file any other form of statutory accounts, make sure that you do so and do so on time.
3. For young businesses, your personal credit score still matters
Credit records are also sometimes called credit histories and basically they’re evidence how a business or a person manages money. Start-ups and younger companies don’t have a credit history so lenders may well look to see how their founders have managed their own money in the past.
4. Join forces with an experienced and reputable partner
There are numerous benefits to this, but one is that business credit scores can include information about business owners and office bearers. Even if you have a good credit record yourself, having a partner who also has a good credit history can put that extra polish on your business credit file, which can be particularly helpful at times when lenders are being cautious. If your own credit history is less than spotless then having someone on board who can impress lenders may be vital to getting any sort of credit.
5. Pay your bills on time
It may sound basic, in fact it is basic, but it also matters. There are basically two main reasons why companies fail to pay bills on time. One is lack of organisation and the other is lack of funds. Relying on an individual’s memory is very risky, particularly since even the most organised person in the world can become ill or have an accident or just have a bad day and forget something. Because of this, it’s important to have systems in place so that either bills are paid automatically or that there is a clear reminder to pay them when they are due. On a side note, if you wish to dispute a bill then you need to do so by an authorised means. This may well mean paying the bill and then going through a legal process to reclaim the money. Using a debit or credit card can be helpful in this situation since the companies which run them have chargeback schemes, which are free and simple to use and generally much less hassle than going to court. These do not impact your credit record in any way.
6. Make sure you have all necessary insurance policies
Now this may sound like a strange tip, but in very simple terms an insurance policy is a regular, fixed expense, the purpose of which is to save you from having to find a large amount of money, possibly at short notice. Obviously it’s unlikely to be able to protect you from all unexpected expenses, but it can be a hugely useful safety net, which can prevent your finances from being devastated by adverse circumstances.