We have officially declared 2016 as the year to break bad credit habits. Because why not? The New Year can offer a fresh start—the beginning of a better, brighter credit outlook for your business. We’ve created a few tips to get your 2016 off to a great start. Breaking these bad habits can help you:
- Improve your credit standing
- Get optimum terms and rates
- Obtain more substantial loans
- Make low to medium risk decisions quickly and easily
Let’s get started.
Bad Habit #1: Not knowing your credit score.
Quick, what’s your business credit score? If you can’t answer this question, it’s time to find out. There are several services that can provide you with not only your credit score, but other important measurements as well. These reports can help you gauge, correct, or even take advantage of the financial standing of your business. This article from NerdWallet is a great place to start, as it breaks down various business credit score providers, their offerings, and costs.
Once you’ve gotten your report, study it carefully and keep an eye out for inaccuracies. If you find one, dispute it—it can make a big difference to your business credit score.
Bad Habit #2: Making late payments.
Being a little late on your payments never hurt anything, right? Wrong. Making 100% of your payments on time is perhaps the most important thing you can do for your business credit score. Sure, a day or two might not get reported, but why pay late fees if you don’t have to? Set a hard-and-fast payment schedule and stick to it.
Bad Habit #3: Connecting your business and personal credit.
Don’t do it. And if they are already connected, undo it. We hate to think about this, but if your business goes under and the financing is under your name, you may have to declare bankruptcy personally. This is not good, because it will stay on your credit report for seven to ten years. Separate them as soon as possible.
Bad Habit #4: Avoiding financing or credit.
You may have heard this tip before about personal credit, but the same goes for your business. To improve your credit score you have to use credit—plain and simple. Don’t be afraid to seek out sensible financing or leasing opportunities, and make smart use of credit cards. Of course, use these funding outlets wisely and make your payments on time. This will ensure you have the positive credit activity you need to boost your score, get more favorable terms, and ultimately, get the funding you need to achieve your goals.
While these credit tips may seem simple, it can be tough to break bad habits. A great business credit score has a two-fold benefit. When times are good, it allows you to get the capital you need to grow your business. When times are bad, it helps you to get the capital you need to simply keep going.
Here’s to 2016—a year of great credit habits.