The small business owners often blend the personal credits and the business credits without having a proper account for each separately .This the main reason for their credits to have its toll. Working out on your credit and trying to make your expenses out of it more accountable will help to manage credits. Keep reading for tips on how to build business credit. The article covers:
- Understand How Bad Your Credit Could Be
- Review the Details and Rectify the Mistakes, if Any
- Separate Personal and Business Credits Expeditiously
- If the Report is Not a Mistake, get ready to solve them
Small businesses have a characteristic problem in that they tend to connect their personal credit with the business credit. Operating bad credit small business, whose credit history is connected to personal credit, will always have its toll. Take for example, the bad credit small business loans, financial institutions like government banks will hardly consider your loans application after you separated the two. In this scenario owners find small business bad credit financing an uphill task.
This is mostly because the entrepreneurs sometimes abuse their personal credits, leading to fears that they might follow the same with business credit too. This is just the tip of the ice berg. In the following paragraphs let us see how, then, small business bad credit financing is done and the larger picture of how a bad credit small business is run.
Small business owners often have great business ideas and the necessary zeal but no requisite finance. Although bad credit should worry you, don’t panic. Get your act together and fast.
Understand How Bad Your Credit Could Be
This is the first step in your effort to erase bad credit. No matter whether it was your excessive use of credit card or the missed payments on your loans or credit card payment, make sure what negative points your business credit history has. To this end, you can get your credit report from all three credit reporting agencies. Because you never know which reporting agency your creditor will or has already reported to. Now you have the facts and figures on hand.
Review the Details and Rectify the Mistakes, if Any
Reports can notoriously have mistakes more often than less. List out them out chronologically and correspond with the appropriate reporting bureau with evidences (this process is called as disputing). Credit report bureaus re investigate and correct the mistakes or delete an obsolete entry from the file. But if your dispute is frivolous, they remain intact. This is very important for you to build business credit.
If the Report is Not a Mistake, get ready to solve them
If the negative points in the report are genuine, you need to work out an aggressive plan of action to resolve them. For example you can start paying of the debt one by one perhaps starting with the highest one with high interest first.
Separate Personal and Business Credits Expeditiously
Small business owners have shown tendencies to withdraw business credits for personal use. This on one hand deprives business of the funds needed for exigencies and on the other reflects poorly on your fiscal discipline. Lenders naturally perceive that one draws business credits for personal uses when the owner is bereft of money in his own credit. So, separating the accounts to keep credit reports clean is one big step towards improving bad credit reports and building your business credit.