Your credit score takes time to build. However, if you’re an entrepreneur or small business owner, time isn’t always on your side. Whether you’re applying for a high-risk merchant account or talking with vendors to secure the best possible goods and services on the market, every day is a 24-hour battle.
Your credit score is what will potentially open new doors for you to seek business capital, especially for high-risk merchant accounts. Your credit score is a significant aspect that will be taken into consideration and can either support or hinder your chances of having access to finances. Unfortunately, building credit isn’t often seen as something that provides a quick result for seeking capital.
So, what does your credit score mean, how does it affect you, and how can you improve it? Let’s take a look at how your credit score can help the future success of your business and a few ways you can improve your credit score before launching your business.
For business owners, credit scores are vital to the success of the company. In short, your credit score is what heavily influences what type of financing you will be able to secure when it comes time to open your business. Having a high credit score means you have more money available to borrow.
On the other hand, having a low credit score can prevent you from being able to borrow any money whatsoever. Furthermore, having strong credit can also lead to lower insurance premiums, as well as interest rates, and can even help you get approved for a lease or receive access to better terms from potential business vendors.
The good news, however, is that even if you don’t have a high credit score, there are several ways that you can quickly make improvements, and you can start as soon as today.
1 – Establish Good Payment History
One of the quickest ways to improve your credit score is to pay your bills on time. Regardless of how good you think your credit score is, not paying your bills on time will drastically hurt your credit. Not making payments on time can put a dent in your credit score, especially if the late payment is recorded.
Not only is paying bills before their due date an excellent habit to form, but it can also be beneficial in maintaining a stable relationship with your creditor should a mistake ever happen. While you may not think something like this can make a huge difference in your credit score, in some cases, it’s the difference between a credit score of 650 and 700.
2 – Manage Existing Credit
Another thing that can damage your credit score if having numerous accounts open in which you owe a lot of money. While loans are necessary at times, it’s often advised by experts to keep any revolving debt you may have at a minimum. This will allow you better credit utilization, which works in favor of boosting your credit score.
Banks commonly like to see that you have more than 70% of available credit capacity, while anything below 50% is viewed as marginal, and 30% or less is viewed as a risk.
3 – Avoid Closing Credit Accounts
We understand you’ve spent a lot of time trying to pay off your outstanding balances, and closing the account seems like the end of a long journey. However, while some may think closing credit accounts after paying them off is a good idea, this is something that should be avoided.
In fact, closing credit accounts could have an unfavorable effect on your credit score, one that could reduce yours by nearly 20 points.
4 – Correct Any Mistakes
Mistakes are bound to happen, especially in the digital era. Whether your account chargers were off or there was a mistake in your interest rate, small errors can usually be fixed with a quick phone call. However, any error, big or small, can hurt your credit score, which is why you should correct any mistake you find as quickly as possible.
Though it may seem like a small step, fixing errors found in your credit can boost your credit score in as little as a couple of months.
While it may take some time to build your credit score, it could be the deciding factor between success and failure for your business. Not only that, but starting early to build your credit score can also help provide you with a safety net in the future should you need it.
Using the suggestions above, you can start building and improve your credit score today and put yourself and your business in better standing for more favorable terms.
At High Risk Pay, we understand the importance of having a good credit score and what that means for the success of our clients. Whether you work in a high-risk industry or have high volumes of goods and services, we provide high-risk merchant accounts to a full range of businesses. We can help you get fast approval, no set-up fees, and even prevent chargeback, regardless of your credit score.
Alongside our 95% approval rate, we also offer no application fee and no contract. All you have to do is sign up, and within 48 hours of approval, we can provide you with secure and easy payment options to help you and your business compete.
If you’re looking for the right high-risk merchant account partner to help elevate your business to success, but are finding it difficult to get approved, contact High Risk Pay today at (800) 956-1277 or send us an email at firstname.lastname@example.org.