20 Nov Five Factors Affecting Your Business Credit
How is a business credit score established? What are your best chances of securing a loan? Below are some factors that can affect the future of your business credit and how to get the best off them:
- Payment History – Payment history is a very essential part of the credit profile of any business and the D&B Paydex score of the business is actually based on this. The best way to maintain a good payment history is to make sure your vendors are paid on time or even earlier than required (i.e. before receiving the invoice).
- Credit Applications – The truth is that multiple credit applications can be detrimental to your bid for loan approval. If you make too many applications within a short period of time, your company might look desperate which might be a signal to potential lenders to be wary of your company since it makes you look desperate. You can avoid this by using your credit accordingly while keeping applications to the barest minimum, doing just enough to realize your goals.
- Blanket UCC Filings – Most people are not aware that there’s need for them to take note of the order of proceedings for obtaining certain loans, and the necessary UCC fillings by the lender. Some lenders file “blanket” fillings which gives them an interest in your entire asset. The implication of this is that the blanket UCC fillings takes precedence over subsequent fillings, reducing your chances of obtaining credit from somewhere else. How do you avoid this? Be careful when planning your credit, make sure you negotiate your UCC fillings based on your needs. For instance, if you want to exclude a particular filling from your UCC filling so you can use it to secure another loan, make sure you explain this in advance, so the items can be excluded from your blanket fillings or you should get the account or loan whose UCC filling is more specific, first. Some experts are of the opinion that you should open accounts with different competing UCC filings simultaneously and negotiate the details with all the parties involved at once.
- Company Financials – If you’re going with D&B, you must learn to ensure that your credit file financials are updated. If you fail to do this, it could have a negative effect on your company whenever your lender decides to compare the data. To avoid this, it is advisable to make sure your financials are up to date and reflect your present financial strength. This should be done periodically.
- Legal structure of the company – Your company’s legal structure (partnership versus LLC versus INC, etc.) can have a huge effect on your business credit. Most lenders are reluctant to give loans to partnerships and sole proprietorships, and they’ll rather give to limited liability companies and corporations. The best thing to do in this situation is to make sure your company is incorporated. Ability to access credit is just one of the many benefits of incorporation.
There are several other factors that can limit your ability to obtain credit, they include; your existing debt, how invested a person is in the company, and sometimes your personal credit might also affect your ability to access credit. At the end of the day, it is easier to obtain approval for loans if you’re able to paint a more balanced picture.
About the Author
Jenella J. Brown is currently the CEO and a FCRA Board Certified Credit Consultant at A Good Name Credit Solutions & Tax Service, LLC. At A Good Name Credit Solutions, she specializes in raising credit scores, income taxes, tax resolutions, and helping business owners establish excellent business credit scores and then leverage those scores to access cash and credit for their businesses.
Ms. Brown is the author of the book “A Good Name Credit Solutions” which can be purchased on amazon. The book is a personal guide designed to give the reader a step-by-step process of understanding how the credit system works and how to restore their own credit. Ms. Brown is also the mastermind behind the release of the exclusive Business Funding Suite. The Business Credit and Funding Suite is the leading business cash and credit access system in the world today. For more information on building business credit, business loans, or tax issues or credit restoration; visit the website at: https://bizcredit-agoodname.com or www.agoodnamecredit.com Book your FREE consultation Today: http://bit.ly/2Io3EmP