All business owners know that to have success, business credit is essential. Probably, credit is what launched you when you first started your business, grew your business or, even opened up new branches for expansion. Plus, credit can be good if utilized well but can be a nightmare when business is bad. Besides, it can be a daunting task, especially if you have a bad credit history. If this has happened to you, do not panic, as many business owners are facing the same. There are a few things you can do to recover your credit and turn a new leaf. Below are ways you can try to qualify for business credit with a bad credit history.
A good deal of business owners does not understand the differences between personal and business credit. Personal credit and business credit are not tied but can be interconnected. From time to time, creditors and other lenders will check one or the other to discern how well you can manage credit. Especially for a new business, many lenders will check the personal credit to extend business credit. For this reason, you may want to focus on business credit without a personal guarantee, as this could put your assets to risk. Although they are interlinked, you can take the necessary steps to separate the two entities as your business expands.
All business owners and entrepreneurs take business credit with the good intention of paying back. However, this is not always the case, and one may find the business in trouble and unable to keep up their credit scores. When you find yourself at such a crossroads, your best option to build business credit in 30 days is to get a business credit card for bad debts. Some companies can bail you out, and you may get a second chance towards improving your business credit score, to stay afloat. Also, you can keep working on your credit, and be sure to update all your credit information as these will contribute to the business credit report.
When did you last go through your business credit report? Business credit reporting bureaus collect information from different sources. Sometimes all the information is not always accurate and may contain errors. The business owner has to keep updating their information, for example, in case of a change in location, the number of employees, financial data, including the credit capacity of the business. Credit agencies will also include reports on your history together, and so you want to be in the know of the contents of your credit report. This simple act will also guide you on what you qualify for, based on the credit score.
Paying early could be beneficial because the payment history you have with lenders and credit card issuers will appear on your business credit score. Importantly, as you make on-time payments for your business credits do the same for personal finances as well. If you are late in making payments, it will show on the credit report and affect your credit score. Some companies will give leeway and may only penalize you when you go beyond 30 days and others even 90 days. Make sure you weigh your options and pick the best fit for you when it comes to choosing creditors and lenders.
Establishing tradelines will help keep track of the activities between a creditor and your business. The tradeline will also contain account data, such as the date the credit was extended to the business, payment history, all levels of default if you missed making payments, and the total amount owed to the date. If you end up closing the account, the account in question will remain in your credit report as a tradeline. However, you could have a business credit report without any tradelines, but it may be difficult to build your business credit without any reports from your trade lines. Ask every vendor to report your payment activity so that your vendors can make a good report. That too will increase your credit score
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