By Suhaib Mohammed
You have a good credit rating if you (or your business) is suitable for receiving credit. It means that you’re reliable in repaying your debt because you’ve actually done so in the past. A good credit rating will help you secure loans and take your business to the next level. Here are five ways to help you achieve that:
- Make your business transactions positive
Start by separating your business account from your personal account. This will keep your venture professional, and save your business from the woes of personal and unaccounted expenses. Ensure that you have a good payment history, as it accounts for 35 percent of your credit score. To achieve this, try to pay your debt often and on time.
- Know your current credit score
One of the core things lenders consider when deciding to give out loans is your credit score as an individual and as a business owner. A credit score is an analysis of your credit report and past information. It gives your lenders enough data to ascertain whether you can pay back if given a loan.
Your company size, business structure, payment habits and length of credit history among others, are some of the factors credit bureaus consider before increasing or decreasing your credit score. Knowing your credit score will guide you in taking steps to ensure your business is credit worthy.
- Pay your bills on time
Part of what lenders examine before confirming whether your business is credit worthy or not, is the way you settle outstanding payments. Once they discover that you pay your bills on time, your business may be considered as credit worthy. If a business regularly meets its payment obligations, lenders will assume that the same standards will be applied for loans and other financial products offered to that venture.
- Pay above the minimum monthly fees
To keep your financials positive and achieve credit worthiness, attempt to pay slightly more than the minimum monthly fees required from a current loan. This may be difficult to achieve, considering the huge cost of running a business in Nigeria for example, but it will help you pay off your outstanding debt faster. By doing this, you are reducing the assessment of late fees and your financials will remain positive.
- Set a recurring payment plan
Another great way to make your business credit worthy is to have a recurring payment plan. A payment plan will keep you organized and help to easily track expenditure. You can set up payment plans to automatically pay your bills – directly from your bank account – on or before the due date.
It can be challenging to be credit worthy in Africa’s tough business landscape. However, with discipline in applying the tips for increasing your credit worthiness, you will attract the right creditors, investors and employees to your business.
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