Your business credit score is one of the most important underlying factors with the ability to impact all sorts of interactions your business needs to undergo in order to thrive. Business credit ratings not only play a major part in being able to secure a loan when you need it to keep operations moving, but also impact your overall relationship with lenders, connections with other business owners and much more. Therefore, having a bad rating can really bring you down and slow down business altogether. Understanding why, exactly, your score is low, is the key to remedying the situation. Some of the causes of a low score could include:
The Size of Your Company
One of the details that’s considered when forming your business credit ratings is the size of your business. This is why getting financial support can be very difficult for most smaller or newer businesses. If your business is just starting out, this could be the sole reason why your score is lower than you’d like. Simply keep moving forward and promote other credit-building behaviors to overcome this issue.
Age of Financial Accounts
The amount of time that has elapsed since the opening of your oldest account can have a rather large impact on your business credit ratings as well. This is because having a longstanding account can help to establish a certain amount of financial responsibility, as well as provide a trail of your spending habits within a business context. If all of your accounts are relatively new, this could be a source of negative movement within your ratings.
Missed Payments
This is one of the more obvious causes of a bad credit score. If your invoices have been charged off or marked as delinquent for more than two billing cycles, it’s likely to have a huge negative impact on your credit ratings. This is why paying your bills, debts and suppliers on time is crucial to helping your business thrive in the coming years.
Amount of Credit Lines You’ve Applied For
The number of credit lines you apply for in a nine month stretch can also say a great deal about your business’s financial situation. If you apply for too many credit lines, your score is likely to reflect that you’re having trouble financially, and thus lower your numbers.
These are just some of the most common reasons why you might be experiencing poor business credit ratings. To learn more about how your credit got the way it is and how to remedy it, speak to us today.
