Borrow More Money!
Small businesses can improve their credit rating by borrowing more money. You heard me right! Borrow
money even when your business does not need it and pay it back on time or better still clear the loan
early. Bizarrely, if you have never applied for a loan before then this will negatively impact on your
credit score.
The clever way to improve your credit score is by taking advantage of offers that charge you zero
percent interest if you pay by a certain date. Why pay the bank interest on a loan when you have money in
the bank?
Some lenders offer some very low interest rate loans for asset purchases. Use their loans to buy cars,
office equipment or machinery.
Use your cash in your bank to negotiate early payment discounts with your suppliers. Many suppliers
with poor cash flow will even offer up to 2% extra discount if you pay their invoices within 7 days.
Lenders base your credit score on your payment history and the amounts of debts outstanding. If you
have taken out many small loans and paid them back on time then this will stand you in good stead for
when larger sums of monies are required.
Ask for a Quotation First
When applying for credit make sure you get a quotation first before actually applying for the loan.
Lenders will not do a credit search to give you a quotation. They will contact one or more credit
reference agencies when you apply for a loan.
Every time you apply for a loan the search gets recorded. You want to keep this "credit footprint" as
small as possible.
Do not Move House
Changing your house address can be disruptive to your credit score. Lenders like to see stability and
moving house can add minus points to your credit score. If you are planning on moving house apply for
your business loans before you move.
Know Your Credit Score
Lenders base their lending criteria based on reports from credit agencies and your businesses trading
history. Sometimes credit agencies can get it wrong or still record a debt outstanding that was cleared
years ago. For a small fee they will happily send you your businesses credit report. Make sure you examine it for errors and highlight them. They are
obliged to change the report if you can prove that sums outstanding have been cleared.
You should check your credit score with the credit agencies at least every couple of years to make
sure that there are no errors.
Do not Close Unused Accounts
If you have credit cards that you no longer need, destroy them every time a new one arrives. You
credit scores benefits if you have credit facilities from many different lending institutions. Some
lenders charge you a set annual fee for a credit card so make sure you cancel these.
Clean up Your Balance Sheet
Get rid of slow selling stock. Dispose of unwanted machinery. This will improve you balance sheet and
enhance your credit score.
Boosting your credit score will not only improve your standing with the banks. Suppliers also check
your credit score and some even offer better deals to companies that are less of a credit risk.
