Whether you’re establishing a business or running one for years, you should know that your credit score can make or break the game. It defines your creditworthiness. In the case of a low business credit score, you’ll have difficulty finding potential investors. Besides, lenders will be hard to please, given your poor financial performance.
Sometimes, your credit score is low due to your ignorance. If you have not been putting effort into making things work with your debtors, it can affect your business credit report in India. Your credit score falls and you have to manage funds from other businesses to run operations. Here, you could save your business from taking further credit as you can take stern measures to recover money from your business credit defaulters.
Let us learn about the five mistakes that can ruin your business credit score and how you can achieve a good score.
Not Paying Your Dues Timely
If you owe your vendor money, you should be proactive in paying your dues on time. If you’ve been missing or delaying payments, it can lead to a payment dispute with your vendor. Not only do you lose reputation in the market, but your business credit score also goes for a toss. It’s a common mistake that many businesses make and realize its consequences in hindsight.
When doing business, you should focus on payment settlement more than your clients. It helps you build a good rapport and a solid working relationship with your vendors and suppliers.
Not Doing Anything About Your Debts
If you’ve taken debt and now you’re finding it difficult to repay, you need to manage your finances well. You may not enjoy the financial freedom that you used to enjoy. Besides, your poor credit score can indicate that doing business with you could be risky. How do you fall into a debt trap?
Consider a scenario where you’ve taken credit, and it has turned into a debt. It could be due to the unnecessary expenses you made in the last quarter. The other time you may have spent more money on new clients than required. Now you’re finding ways to clear the debt.
Here, it’s relevant to learn a few business credit management tactics. When you know how to manage credit, you can save yourself from falling into the debt trap.
Availing Unwanted Credit
If you’ve got a habit of taking credit frequently, you are going to be at a loss. We understand that you may have plans to expand your business, and you need someone to fund your business. However, if you’re not consistent in paying the previous amount or making regular sales, availing of new credit is not a good idea. Your application gets submitted to credit information bureaus, and it can impact your business credit score negatively.
Not Taking Strict Action Against Credit Defaulters
You can’t keep making courtesy calls to your payment defaulters. If you think you’ve reached your limits to settle payments with your debtor, you can approach the CreditQ team to help you out. It can help you through the payment settlement process and save your business from suspected fraud.
Not Checking Your Business Credit Report Regularly
A simple mistake can lead to dire consequences. If you don’t have a habit of checking your credit information report (CIR) now and then, you may stay unaware of the changes occurring in your credit report. Your business credit score can get impacted if you’ve provided incorrect/obsolete information in your business CIR. Another scenario can be not evaluating your risks and strengths while reviewing your credit report.
All these mistakes can impact your reputation. That’s why you should be proactive in setting standards to do business and enjoy financial freedom.