If you’ve purchased a home, you’re likely familiar with ways to improve your credit scores. But if you are a business owner, you have to be equally vigilant since many lenders look at your personal as well as your business credit before giving you a loan for equipment, vehicles, or anything else you may need. Here are a few tips to help you stay on top of your credit score for the good of your business.
1. Keep an Eye on Personal Credit Scores
You can get an account with Equifax or Transunion Canada which allows you to constantly monitor your credit score online for a small yearly fee. Log on to your account once every few months to ensure you aren’t the victim of identity theft or inappropriate items haven’t been entered on your record. It is very common to find mistakes on your credit record, and the agencies rely on you to contact them about mistakes. There is no oversight in this area except your own, so be vigilant.
2. Get Inaccurate Items Removed
Your credit score shouldn’t reflect anything that is more than seven years old or inaccurate. Inaccurate items are of the most concern and have to be dealt with immediately. Historical items are also important; the more items there are on your credit report, the less likely you are to get credit from lenders. While most lenders will look at dates and the nature of the items, sheer volume is not good and credit agencies do not automatically remove historical items.
3. Use and Pay Off Your Credit Card
Don’t treat your credit card like kryptonite. Use it about once a month for small purchases and pay those purchases off. This will help you keep your good credit record motoring along. If you can’t afford to pay off your credit card every month, sign up for automatic minimum payments so you can’t be reported to a credit agency for a missed bill.
4. Don’t Use All Your Credit
The Financial Consumer Agency of Canada reports that your credit utilization rate should only be between 30-50% of your available credit. This means if you want to buy a fax machine for your office, get a $1000 store credit card if the machine is $400 to make the purchase look good to potential lenders.
5. Don’t Have Too Many Credit Cards of the same type
You should have more than one credit card to build a history, or a credit card and a line of credit. More than two credit cards of each type, such as more than two Visas, may make a potential lender wary about your amount of available credit. While getting a card for points or rewards may be tempting, make sure that you close out other credit cards before opening up another one.
6. Pay Bills Right Away
It’s easy to procrastinate bill payments, but bottom line, you shouldn’t do it. Sign up for online bill payments for all of your accounts to make it easier to pay bills on time and guard yourself against the possibility of cheques getting lost in the mail. If you have a company that doesn’t accept online bill payments, sit down and write the cheque for it the moment the bill comes in.
7. Take Out Business Credit n- closer and call to action
If your business is brand new and you plan on making purchases as a business, you need to establish business credit. This can be something as small as a $500 credit card for an office supply place or something as large as a commercial car or equipment loan. If you are purchasing equipment, Patron West can often find financing even for a new business, as long as your personal credit score is decent.
Equipment financing is a great way to develop your business credit while getting much-needed assets for your business such as office equipment, vehicles, or anything else you may need. Patron West is a leader in the equipment financing field and can get new and small businesses financing they may not otherwise see from a bank. Give us a call today to find out how we can get you the equipment you need and establish your business credit.