Bad Credit Rating? 3 Options for Your Headaches

Having a bad credit rating doesn’t mean all roads are blocked. Small business owners still have a plethora of viable solutions that will allow them to keep the business growing at the same time as improving the credit score.

Remember, credit rating is used as an indicator of how you manage your finances in the future. It does not reflect where you are right now and there are a lot of things that lenders look at aside from credit rating. Meaning that any positive step you take now will have a greater impact than you think.

1) Check for errors

Just like any report that you get for your finances, take a second and third look for any errors as they can be bad enough to hurt your credit score. Not all records a created equal as human or technical errors will almost always appear. On time payments can be classified as late or inclusion of negative records that’s no longer relevant. Once found, don’t wait on getting them fixed with a credit bureau such as Equifax, Experian or TransUnion. They might look like a speck at first, but that speck could be more lethal than you think.

2) Treat repayments like grocery bills

Taking a loan means taking on an expected recurring expense like paying for your phone or electricity bills. Instead of waiting until the end of the month to make a lump sum payment, try to do regular micropayments instead. This will prevent you from piling up the spending, being unable to deal with unexpected changes and help lower your credit utilization ratio. A ratio of how much credit you currently use in relation to how much is available to you.

Credit reporting agencies look at credit utilization ratio as one of the contributing factors in setting your credit score. By making it a priority to meet repayment more often, you can maintain a low ratio. As a result, your credit score will be happier and so will you.

3) Add more positive records to your file

There are steps you can take to add more positive records to your file. Start by making sure that you are meeting your obligations on time from now on. Not only this is the simplest step you can start with, it also helps establish a stronger relationship with your partners. Secondly, try to meet your past dues while you are at it. You can do so by integrating it into your monthly business expense instead of piling them up. Erasing negative in your credit history. Lastly, add any positive payment experience you have with your vendors or suppliers.

These three options are a great point to start and as you progress, it becomes much more manageable and you’re able to avoid the same mistakes. At first glance trying to improve your credit score looks exhausting but remember that the gain is so much more that will enable you to access better funding in the future.