3 Steps to Better Credit for Entrepreneurs
When seeking finances for your small business you will often be forced to turn to large financial institution. One of the key metrics they use for determining whether or not to approve your loan request is your credit score. To better increase the likelihood of your small business getting approve for a loan you will therefore need some advice on boosting your credit score. Fox Business continues with three steps that do just that along with our own commentary in italics, “While nothing can be done to change past results, small business owners can look to increase their cash on hand and, accordingly, their credit scores. Small business owners must focus their attention in the following areas:
- Run lean, efficient operations
- Part of getting approved for credit is having cash flows coming in and a high degree of profitability. The profitability comes from cutting everything that is needed and running at peak efficiency. Further freelancers and part timers can help reduce costs.
- Eliminating a lot of the excess like mentioned above improves efficiency and simplifies your cash flows. If you can pay off your expenses immediately rather than put them off until later, this can reduce your small business’s overall level of debt which will look much more favorable to a bank when assessing your credit worthiness. Also, receiving payment from clients now rather than at some time in the future can also boost your debt to cash ratios.
- Speaking of receivables, for those who you were not able to receive payment from immediately, be firm with them when it comes time to collect or they will likely abuse any slack you provided them. Having too many receivables from sources that the bank is not sure about will also hurt your credit score so reducing those is a must. Try to keep on only those who have long time histories of paying you back with few blemishes.
Click on the link below to see the rest of the article and their explanation of each step.
Source - Fox Business