Credit Repair Tips for Business Credit
Your business credit score is worth its weight in gold. It directly affects not just whether or not you get approved for many types of financing, but also how much you end up paying in interest. With excellent credit, your business can qualify for larger loan amounts, better repayment terms and lower interest rates. How can you rebuild an excellent credit rating? Follow these practical credit repair tips.
1. Negotiate Restructured Payments
The first thing you can try to eliminate debt as quickly as possible is to negotiate with banks or creditors. In many cases, lenders prefer to settle on a lower total amount than to have to deal with the hassle of hiring a collection service or facing possible bankruptcy. In other words, instead of simply ignoring building debt, it’s much better to get lenders on your side. Explain the situation honestly and be prepared to do your part to make payments in exchange for a lower total obligation.
2. Pay Off Your Debt As Quickly As Possible
The longer debt sits there, the more interest accrues. Over time, this compounding interest can grow to be larger than the original debt itself. Don’t let this happen. Take your credit score back by treating debts as one of your most important obligations.
It can require some finesse to know what business needs you have to invest in to continue generating cash flow (such as equipment repairs, payroll, and renting expenses) but try to minimize all other expenses while you focus on repaying your debt. Rebuilding your credit is vital for the continued financial health of any kind.
3. Ask Your Lenders To Report Debt Cancellation To Credit Bureaus
As you start to make headway with repayments, politely request that the lenders report your progress to credit bureaus. That way, each payment starts to reflect positively on your business credit. This step is especially important when you succeed in paying off or closing each outstanding loan. Many lenders are happy to take this action to help your business because they don’t want you to go bankrupt any more than you do.
4. Consolidate Your Debts
Debt consolidation isn’t always the answer to poor credit, but it can help in a few specific situations. For example, if you owe money to many different lenders/suppliers, it can simplify things to make a single payment every month instead of trying to remember countless payments. This option is also valuable for refinancing emergency debt under better terms.
Beyond simply repaying what you owe, credit repair relies on training yourself to look at managing money differently. You need to understand how to keep your debt-to-credit ratio low. This helps you now and in the future.