Your credit score has a significant impact on your life, both on a personal level and as a business owner. It plays a role in determining how much funding you’re eligible for, your purchasing power, your interest rates, and the terms of your repayment schedule.
The more you know about credit and your credit score, the better equipped you’ll be to succeed in your business and get approval for small business funding.
Here are five simple steps that make a big difference in strengthening your credit knowledge.
Take a long, honest look at your personal and business finances. Identify past financial mistakes, such as budgeting issues or poor spending habits. Deal with any unresolved bad financial decisions, and have a game plan to improve your financial habits going forward. Doing so will enable you to identify your business’s financial needs and the best source of financing.
The startup phase of business is when companies need funding the most, but often have the hardest time getting it. That’s why it’s important to be forward thinking, planning ahead for how much money your business needs to get off the ground, and what lenders look for when approving applications for small business funding. Make sure to look at your credit report before applying for funding — this gives you time to improve a less-than-great score and correct any errors you see on your report.
Be Detail Oriented
The details of your financial status go beyond just your credit score. Successful business owners look at all the details — credit scores, profit and loss statements, and fixed and variable expenses. Remember, the numbers are what tell the real story of a business. When you’re detail oriented, you can determine the health of your business and implement adjustments and improvements if necessary.
Successful business owners aren’t just knowledgeable about credit and finances — they’re also disciplined and possess self-control. Create and stick to your budgets, use and manage your credit responsibility, and conserve your cash flow. It’s also wise to keep your credit utilization ratio — the amount you owe compared to the cards limits — at or below 30%.
Know Your Priorities
Keep your priorities in line — you may want to buy a new piece of equipment right away, but the best business owners know to pay their invoices on time and keep their debt at a manageable level. Make sure you take care of your priorities first, and know what areas of your personal and business credit need your attention.
Small business funding, especially for companies just starting out, is heavily reliant on a healthy credit score. Strengthening your credit knowledge, planning ahead, being disciplined, and taking steps to improve your personal and business finances are key to taking your business to the next level. When you’re ready, contact ValueOne at 855-258-2571 to learn about our small business funding options.