How To Improve Your Business Credit Rating
Are you thinking of upgrading, expanding, or improving your business? If yes, you better obtain the financial support that you need. One of the most common ways to acquire enough money for your business expansion is by getting bank loans.
Banks look into your business credit rating to determine whether your loan application gets approved or not. According to Investopedia, the business credit score is “a number indicating whether a company is a good candidate to lend money to or do business with.”
So what does this mean to you as a business owner in the construction industry? It shows you that there is a lot of business opportunities waiting to be harnessed. However, competition is fierce. Everyone wants to get a piece of this booming industry. How can you get ahead of your game and stay on top of the competition?
Therefore, it is a must that before you apply for a business loan, you must improve your credit rating or at least get familiar with it. Thankfully, there are different approaches you can take to enhance your credit score and thereby, increase your chance for a loan approval.
Understand how banks will rate your business
Having an inside knowledge of how banks work can give you an overview of what to expect and do to meet the requirements of your loan application. Understanding the parameters banks use when rating your business help you know how to perform the necessary adjustments. While it's difficult to get into details with this short article, let me give you three factors that affect your business rating:
Reason for the loan – obviously, the bank wants to know why you are applying for a loan in the first place. They need to determine whether the money they lend you will be used for the right investment. This will not only ensure that you can generate income from your borrowed money but also improve your ability to pay off your debt.
Credit History – banks know the importance of looking into your credit history to determine your current and future financial status or behavior. They will assess how you paid your previous bank loans and determine how you handled your credit in the past.
Loan repayment – all banks would like to evaluate your ability to pay them back. To lower the risk of non-payment, banks may require collateral and properties they may obtain in case you failed to pay them in full.
Pay your bills on time
If you want to improve your business credit worthiness, you must pay your bills on time. Not only will it save you from surcharges and penalties, but banks will perceive you as a responsible and reliable borrower.
The Balance, a reputable business website, reiterated the importance of paying your bills on time. According to one of the articles posted on their website, “Being bad at paying your bills on time will damage your credit and hurt your business credit rating. Making late payments on your bills can dent your record especially if the creditor chooses to report you.”
The article went on to say, “It goes without saying that paying your business' bills before the due date is not only a good business habit that will improve your scores, but will also be beneficial in maintaining good relationships with your suppliers and creditors.”
Know your financial standing
Before you even apply for a bank loan, get a professional analysis of your financial condition. This is where generating a business credit report comes in. Of course, this might be difficult to do if you don’t have the right tools or knowledge. That’s why CreditBPO, through financial technology, has come up with an automated robo-advisory to generate a profile of your creditworthiness.
CreditBPO is the only company that provides Philippine businesses with actionable insights specific to your business through its auto-generated CreditBPO rating report. Our algorithm was developed by a team of seasoned professionals, in the fields of banking, information technology, and SME operations.
To improve your credit rating, CreditBPO helps you gain a better awareness of the vital factors that may affect your bank loan application and other business transactions such as finding new clients, bidding for new projects, and attracting investors. In deeply committing to our client’s success, we don’t just provide you with an objective analysis of your business performance as well as actionable recommendations on how to improve your credit rating.
Do you want to gain a deeper understanding of what you need to do in your business to improve your creditworthiness and get approved for a bank loan? Do you want to be more confident in approaching banks for loans? Do you want to learn the best practices in your business? If your answer to any of these questions is yes, then contact us by sending us a message via info@creditbpo.com or visit our website www.CreditBPO.com.