Are you familiar with your credit score? How about your business credit score? If your answer is no, then you are not the only one.
Furthermore, many people don’t even check their credit score before applying for a credit card, personal loan, or business loan.
Consequently, they get shocked when they discover that these mistakes are hurting their CIBIL score –since this problem should have been taken into consideration and given full attention.
On the other hand, repairing it has several advantages for you if you have a bad credit score. For instance, you get eligible for more financing, loans with considerably lower interest, and favorable terms.
Once you repair your credit, it also gives you a better chance of achieving your personal and professional goals, such as buying a new home or company and growing your facility. And all this could be possible only after you fix your credit score.
For this reason, you must fix your credit score before you embark on a new project. The pointers mentioned below will help you make positive changes in your financial situation, further giving you opportunities to grow your business.
1. Check Your Credit Record
To fix your bad credit, you need to know your credit score and the best way of doing it is by keeping a regular check on your financial activities.
If you need to find a record for a personal credit score, many financial institutions make them available for you. But, business credit scores are entirely a different matter. It’s because business credit reports are not free of cost. For example, a single credit report can cost anywhere from 40 dollars to 100 dollars.
Therefore, before you fix your credit score, knowing the amount of debt you need to pay is the first crucial step of the procedure.
2. Settle Down Your Business Debt
An effective way to minimize your credit utilization rates is to settle your business debt as soon as possible. If you are a business owner, consider paying the debt with the highest annual interest rate or paying off the lowest debt balance.
Let’s try to understand it with an example. Let’s say you have to clear the debt on two accounts. The first account is charging you an annual interest rate of 20 percent, and the other version is at a 9 percent rate of interest annually.
According to the strategy mentioned above, first, pay off the balance on the account with the highest interest. After employing this strategy, you’ll find that it decreases the amount of interest you are paying and improves your credit score simultaneously.
However, if you are tired of carrying the weight of a bad credit score, there is another option you can use. Consider this simple strategy, known as debt consolidation. In this strategy, you take out a new loan to pay off all your previous debts.
However, when you have bad credit, you can’t avail yourself of a traditional financial institution. So, how can you get a loan when you have a bad credit score? Here services from a credit repair company can help you. These private financial institutions provide you with a loan even when your financial situation is affected by a bad credit rating. And once you repair your credit score, a world of opportunities opens for you.
For instance, your business needs funding, but you can’t use it for a loan because you carry a bad credit score. In that case, instead of seeking a loan from a traditional lender, you can apply for a loan from a credit repair company.
As a result, you continue making positive changes to your business operations with the advantage of a high credit score.
3. Monitor Your Credit Score Frequently
After you know that your credit score is weak, monitoring it will encourage you to change it. You’ll be surprised to find that every small step you take in improving your credit score can lead to a significant change.
To know the status of your credit score often, you can sign up for email alerts. These alerts constantly inform the position of your credit score. Also, your credit monitoring services will give you suggestions on how to improve your credit score.
4. Always Pay Your Bills on Time
The most significant contributor to your low credit score is your payment history. One of the best ways to avoid making any late payments is by setting up an automatic compensation for recurring bills—for example, a car loan or a home loan payment.
As a result, your bill amount will be automatically deducted from your checking account at the date of payment. You won’t have to worry about keeping track of your expenses. However, make sure you have enough credit in your checking account, so there won’t be any issues with payments, or else you could be subject to late fees.
On the other hand, if several of your payments are due on the same day of the month, making it difficult for you to make payments on time, you can request creditors to change the date of payment. Another point to remember is that it may or may not take a few billing cycles for the payment to be on your desired payment date. So, make sure you make the payments until you get official notification of the change in your payment status.
It’s also essential to clear all the terms and conditions with the creditors on your ability to pay. For example, a Federal student loan gives the loanee the benefit of lowering the amount of installment you owe every consecutive month. But, you might not be familiar with these terms if you haven’t adequately communicated with your creditor.
Your credit card issuers may also agree to reduce your interest payment for a short time if you are going through a financial crisis. If you are worried that you might miss a payment, contact your creditor and explain your situation before it happens to explore a better solution.
A bad credit score doesn’t have to slow down your progress. You can take definite actions today and in the future to deal with this issue and improve your credit score.
Knowing your financial status and facing the problem head-on is the only motivation you need to improve your credit. Ensure you check your credit score and report regularly, and become an expert in maintaining your financial well-being.