5 Tips To Fix Bad Business Credit

how to deal with bad business credit rating

Funding a small business in never easy. You could bootstrap your business, which we discuss often on this website, and fund the company yourself. Some bootstrapping founders even finance their new company on their own personal credit card, but that is incredibly risky. But that is slow and prevents a lot of growth potential. You could pitch to investors, but even if they get on board they will control significant equity in the business. 

Business Credit Is Critical

You can also get a business loan, but in case something goes wrong and you start struggling to repay your debt, your bad credit can hold your business back. This means that you have negative listings attached to your credit report, making lending institutions less likely to approve your requests for new loans. In addition, businesses with bad credit also tend to be labelled as untrustworthy. Therefore, it’s always a good idea to do everything you can in order to clean your credit record

We all make mistakes, so this guide will help to rectify them and prevent future financial mishaps. Listed below are 5 tips that are guaranteed to help fix bad business credit fast.

Check Your Credit Report 

Taking a closer look at your credit report is a great way to start dealing with bad business credit. This way, you will be able to figure out what’s causing your bad credit and choose the right way for improving. Formulating the right plan is a key step in tackling bad credit. You can request a free copy of the credit report once per year and every time your loan request is declined. 

Paying for a couple of additional copies when you check your credit report throughout the year is never a bad idea, especially if you want to keep track of your progress. 

Turn To Credit And Financial Experts 

Negative listings are something that can easily cause your business to fail. Luckily, they can be completely removed from your credit record. Today there are experts who can help you do just that, and make financing your business much easier. And there’s no need to worry even if you think you cannot afford hiring experts to do this for you. 

Companies like Clean Credit give you a chance to pay the fee only after your negative listings have been successfully removed from your business credit record

Stay Away From Payday Loans 

Many business owners tend to turn to payday loans in order to get enough money to pay off their current debts

Still, this is something you should avoid because with the loans like this, you usually end up paying much more than you have borrowed. 

In fact, advertising payday loans has been forbidden in many countries all around the world. No matter how tempting a payday loan may seem, keep in mind that there are plenty of better options available out there. Don't give in to the temptation and seeking other financing or budgeting options.

Find A Credit Booster 

Another way you can improve your bad credit is to partner up with a business that has great credit. They can co-sign you a loan you’re going to use to repay your debts and remove negative listings from your record. Of course, in this case, if you default on your loan, it will be your partner who will have to repay it. Just bear in mind that the business you partner up with will probably want to have a say in how your business is being run, in order to make sure they don’t end up stuck with your loan. You could also use a tool like Experian Boost to increase your credit score.

Use Your Business Assets as Collateral 

Using your business assets as collateral is a great way to offset your bad credit in business. When you offer collateral, lending organizations will be more likely to accept your loan request, as it leaves them with something to sell even if you default on the loan. 

Furthermore, with your valuable assets at stake, you will have an added incentive to pay off the loan on time which always has a positive effect on the credit score of your business. 

Build Business Credit Back Up Again

By following all of these tips, you will be able to tackle your bad credit and start working towards cleaning your credit record completely. Just make sure you focus on paying off all of your loans, even if that means missing out on some luxuries you and your employees have got accustomed to. Build back better and make your business credit great again!

lean startup small business guide

I hope you enjoyed this article about advice on how to deal with bad business credit without crippling your business finances.

Interested in more articles about business finances and credit?

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