5 Steps for Business Credit Repair
Repairing your bad business credit is a lot like healing a broken bone. Is it going to be easy? No. Are you going to have to make some alterations to your daily activities? Yes. Is it going to take some time? Yes. But in the end, is it possible to fix? Absolutely! Business credit repair requires some commitment to changing your habits, but it is completely worth it as good business credit will help you earn better terms and rates while opening up more financial options for your company.
Assess the Damage
The first step for business credit repair is to take a look at the harsh reality of your credit score. There are three agencies that report on business credit, Experian, Equifax, and Dun & Bradstreet. You can contact each to obtain a copy of your business credit report or you can subscribe to another service that will monitor your reports for you regularly. You need to know your scores to have a benchmark for improvement. Review the reports and identify the areas where you can make the most progress. Also, check for any mistakes. It is not unusual to spot an error on your business credit report that might be making your score worse than it needs to be.
Pay Down Debt
Having some debt is not a bad thing, but having exorbitant debt is. Start looking for places to trim costs so you can put more money towards paying off your existing debt. Examine the rates you have currently and talk to your creditors to see if it is beneficial to roll your debt over into the one place with the best rate and terms. Making one payment each month towards your debt is much simpler and might help you better manage and plan your strategy to get it paid down.
Negotiate with Creditors
If your business is in a dire situation – such as nearing bankruptcy or about to close permanently – contact your creditors and see if they can work with you on some kind of settlement. Your creditors understand that they will get far less than what they are owed if you go out of business or declare bankruptcy, so they may be open to accommodating a plan to get a percentage of your debt paid off.
Close Unused Accounts
If you have credit cards you are not using, contact the company and ask that they close the account. Make sure you request that they send a letter noting the closure to all of the credit reporting agencies. If you have small debts on a variety of accounts, focus on paying one off at a time and then have the account formally closed. This can make a big impact on your credit report, since it is viewed unfavorably to have debt spread across multiple accounts.
Talk to Vendors and Suppliers
Some of your vendors and suppliers may not be reporting on you to the credit monitoring agencies. If you have terms with your vendors and suppliers and have maintained good relationships with them, ask them to report on you. While some businesses have large credit card balances, they make sure their vendors and suppliers are always paid in full and on time. Illustrating that you’ve responsibly used terms with these businesses could help boost your credit score.
If you follow these steps, healing your business credit is possible. It might take some time, but it will greatly benefit the financial outlook for your business.