Healthy credit is important for the primary guarantors (usually the owners) of a business. While important for anybody, many lenders pay attention to the credit health of the managing members of a company to determine approval and interest rates. Healthy credit can save money by lowering the interest rates applied. Important factors to consider when managing credit include the length of time required to establish positive credit, payment punctuality, expense moderation and attention to accurate activity.
It takes time to establish positive credit.
Healthy credit should be obtained gradually, preferably through a variety of scheduled payments such as for a cell phone, property lease and credit card simultaneously over a period of time. Be sure to keep your credit account with the longest history open even if it is not used, because it demonstrates a history of responsible credit use.
It is important to pay on time.
Scheduled payments at a specific time each month are an excellent way to accomplish this. Not only does it prevent negative credit reporting due to delinquency, but also provides an assurance of consistency important to lenders with whom you apply for a lease or loan. An ability to make consistent payments is an important way to help lower the rate of interest.
Avoid looking like you’re in trouble.
Trying to add on excessive charges quickly in an effort to improve a credit score will likely have the opposite effect. If charges occur on a credit card too frequently, or several charges on multiple cards, it may be seen as an effort to escape financial hardships. Try to avoid applying to multiple financial sources in a limited period of time.
Don’t be blindsided by your Credit.
It is important for businesses and business owners to check their credit reports regularly for false charges, unexpected changes in standing accounts or identity theft. A number of programs exist to provide monthly credit statements, many of which are offered by credit card companies. False charges can damage your credit health by increasing your monthly payments unexpectedly, perhaps on an old unused account that you neglect to check regularly. There may also be accounts that you forgot about or small balances that you forgot to pay off. Identity theft is of course an ever present threat that is especially damaging to business owners due to the generally large credit limits required to run a business.
Healthy credit scores are crucial to positive business.
Make sure you manage your financial accounts effectively. Avoid submitting multiple applications in a short period of time. It is easier to build and maintain a healthy credit score than it is to rebuild a neglected score that has lost its value. To learn more call us at: 407-740-5166 or arrange for one of our representatives click here.