Effective ways to improve your business credit

It can be frustrating experience for small business owner to apply for business credit and it can be equally challenging getting approval on credit applications. In order to meet approval of banks and lenders it's vital you ensure your business is as creditworthy as possible.

Banks are naturally cautious about lending money so it's important you maintain a strong credit profile to give yourself the best opportunity to receive credit from lending institutions.

Below are some tips that can help improve your business credit profile.

Mind your personal credit rating

The main factor that often determines the success of your loan application will be your own personal credit rating.

Although it's important to keep your business and personal finance separate, it's possible for your personal credit to influence your business credit applications.

If you're concerned about the health of your personal credit score here are three habits that could be affecting it.

Always update your credit report

Lenders are generally more likely to accept your credit request if they can refer to up to date information of your credit history. One effective way of building up your credit report is to send audited financial statements to a credit reporting agency, such as Dun and Bradstreet, to collate that information and portray your company's financial history.

Ask for referrals

If you are looking to display your payment track record to other lenders and have a good track record of making prompt payments to your current suppliers, ask them for a referral. By asking them to report the transactions you have made to a credit agency you can effectively use that information to strengthen your business's credit report.

Update any business changes

It's also a good idea to keep track of changes and report any significant updates to your credit reporting agency. For example, an increase in employees being hired or the purchase of new equipment shows your SME is expanding and providing evidence of expansion can be beneficial in improving your credit profile.

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