A good credit score can help you access financing and investment for your firm, just as a good personal credit rating can help you get the best offers on financial items like a credit card, loan, or mortgage. Supplying more funds at a critical time may qualify your company for better deals and cheaper loan rates, which could result in financial savings.
If your business’s credit score is low, you’ll spend more to get financing, raising your costs overall and leaving you with less money to invest. It is incredibly challenging if you’re a small business owner working on your marketing campaigns.
However, maintaining a good credit score may enable you to secure a terrific new partner or supplier, accept more accommodating financing terms to maximize your marketing campaigns, or ensure a lucrative new business. A low grade may restrict your possibilities and prevent you from taking advantage of fresh prospects.
In this article, we’ll discuss the benefits of a good credit score and how you can use this to optimize your marketing campaigns.
What Is a Good Business Credit Score?
An organization’s credit score goes from 0 to 100, with 100 denoting a low risk and 0 denoting a high risk. Your business credit rating improves with a higher score. You aim to raise your company’s credit score and get it as near to 100 as you can.
Your business credit score of 80 or over is generally regarded as excellent. It could also help you obtain better bargains on financial items like business loans, including cheaper interest rates.
If your score falls between 40 and 80, particularly at the lower end of the range, lenders or other businesses, such as suppliers, might ask you for further information to assist them in understanding your financial situation and creditworthiness.
Lenders are seeking a credit score above 40 before agreeing to a loan. Providing more details could be helpful, but your company’s credit rating might still impact the decision. Similarly, it could put other firms off collaborating with you.
Generally, while it will take some time for your marketing campaign to yield results, having a good credit score will provide you with resources to achieve your business goals.
What Factors Impact Your Company’s Credit Score?
The objective of every company owner is to reach as near to 100 as feasible. Various variables can affect whether your score rises or falls. The elements listed below can assist you in building a solid company credit score.
Your Chosen Accounts
All businesses, whether SME single traders or limited corporations, must file their accounts, such as Company Tax Returns or Corporation Taxes, with HM Revenue and Customs (HMRC). It’s crucial to provide complete accounts rather than accounts for small or micro entities. Even though it could lengthen the procedure, timely and compliant submission of the entire accounts can eventually improve the company’s credit rating.
Your Payment History
Your credit score can be impacted by your history of prompt bill payments, just like it might with your personal accounts. Establish the practice of paying all your company expenses promptly to prevent repercussions.
County Court Judgments (CCJs) And Insolvency Actions
If your company is subject to either of these, obtaining financing or favorable credit conditions from suppliers could be exceedingly challenging. Depending on the credit terms you received, it’s bad news for your personal and business credit scores.
Benefits of a Good Credit Score
You will have many benefits over people with lower or no credit scores if you have a strong credit score. If you have an excellent credit score, you will be able to enjoy the following advantages:
Better Conditions and Reduced Rates of Interest for Credit Items
A high credit score has benefits, including that banks may grant you loans and credit cards at cheaper interest rates. Additionally, you may be eligible for additional advantages like a lower processing cost and a bigger loan amount.
Increase your chances of being approved for a loan or credit card
Due to their low-risk status, borrowers with great credit have a higher chance of being approved for loans and credit cards.
Having Access to the Most Rewarding Credit Cards
A solid credit score also qualifies you for the best credit cards available, including those with the lowest interest rates and the best bonuses, including cash back, travel points, and other advantages.
Request a Higher Credit Limit for Your Credit Card
If your credit score is high, you can be given a credit card with a higher credit limit. Your demonstrated creditworthiness makes creditors more likely to provide you with a bigger loan.
Having a Pre-approval for a Lending Offer
Borrowers with good credit can also apply for pre-approved loan offers. Banks typically extend pre-approved loan offers to current clients who have a solid credit history.
How to Improve Your Company’s Credit Rating
When looking for a loan, you’ll reap many advantages if your business’ credit score is high. Higher credit scores result in lower interest rates and longer terms, which means cheaper monthly payments. A poor score, on the other hand, will likely allow you to qualify for a larger loan and require less insurance.
Experts suggest the following actions you can do to improve your company credit score if it isn’t as high as you’d like:
Use automatic payments or calendar reminders to pay your bills on time.
Improve your credit utilization or how much available credit you utilize (the less you use, the better). Ensure your balances are kept below the 15% cap on your credit limit.
Any inaccuracies in credit reporting should be corrected right away. You should be able to see the entirety of your history once you’ve run your company credit report. By doing this, you’ll be able to correct any errors that could adversely affect your credit score.
Final Thoughts
Access to business credit is a company’s lifeline. You can utilize it to obtain the funding you require to expand your company, pay continuing debts, purchase goods, hire new staff members, and have cash to pay operating expenses.
The more steps you take to build business credit, your firm will have financial opportunities. Banks, lenders, and suppliers utilize business credit reports to assess a company’s creditworthiness. You may create a safety net for your firm by developing strong business credit, so receiving the required finances should be easy.
