Why Credit is Crucial for Small Businesses
If you have poor credit, it will be difficult to obtain the financing to run your business, and you may face numerous other obstacles. Whether your score has been hurt by fraudulent information or legitimate negative history, thankfully there are ways to remedy the situation.
Ramon Ray interviewed Creditera CEO Levi King on smallbiztechnology.com, offering readers several tips on monitoring and amending your business credit score.
Reasons to check your credit score and repair it:
1. Credit affects your ability to obtain goods & services:
Without solid credit, suppliers and wholesalers won’t extend net 60 or 90 terms, and managing cash flow will be problematic. If you are a manufacturer or retailer, this handicaps your business, King explains.
2. Competitors with great credit prevail in a bidding war:
Often companies bidding for jobs lose to competitors with stellar credit ratings. Even business owners with ongoing relationships with companies, may lose bids because of credit issues. Unfortunately, even if you have a good relationship with your customer, credit scores are usually the bottom line, King points out.
3. Good credit helps land coveted contracts:
When courting big companies and government entities, small businesses need a minimum credit score of 75 (almost always D&B). It doesn’t matter if you have the best pricing because, in this case, numbers rule.
4. It gives more freedom:
Most business owners choose to avoid personal guarantees when contracting with suppliers, and having strong credit gives them that option.
Know your credit rating and fix it if necessary.
Many business owners pay little attention to their business credit, and fail to notice inaccuracies. It is important to look for incorrect information that may be hurting your credit rating, such as:
- under-reported revenue
- false SIC/NAICS codes
- late payments
Three simple ways to improve your credit:
1. Regularly review your credit report with a fine-toothed comb.
It’s worth it to set aside some time for this; a whopping 25% of all credit reports contain misinformation.
2. Dispute any errors you find.
Be prepared with documentation supporting your claim–businesses are required to gather evidence to prove that the information is false.
3. Don’t run an all-cash business.
The single most powerful thing you can do to improve your credit rating is to proactively utilize credit cards in your business name and make on-time payments. Adding positive information to the mix will outweigh the negative.
To read the original article in its entirety, please visit smallbiztechnology.com.