5 Tips To Clean Your Business Credit

Posted by Nabin Shaw on March 11th, 2020

There are several tips that you can use when it comes to the best way to clean business credit.

Loan

The first tip is to take out a personal loan that will help you to repay your debts. A lot of people are not going to want to do this but it is actually going to be a good idea when you want to clean up your credit. This is going to be known as debt consolidation because you are going to centralize all of your debts into just one loan. Plus, as long as you are making the payments on time, then you are going to be able to make the credit score of the business go up.

Negotiate

The second tip is to negotiate with all of your creditors to help reduce the amount of debt that you owe them. If your debt has been outstanding for a long period of time, then there is a good chance that the collection agency is not going to have a problem with you clearing up your debt. In fact, there is a chance that you will pay 50 to 70 percent less of your debt in this way. But you are going to want to get it in writing to make sure that they are going to honor their end of the bargain after you have made the payment. This is because there are some cases when it is not going to be removed from their credit report.

Credit card

The third tip is to apply for a secure credit card. There is a big chance that if you have bad credit that you are not going to be able to get a conventional credit card. Therefore, when you are trying to rebuild your credit, you want to try to get a credit card that will guarantee that you are going to be approved when you deposit an amount that is equal to the credit limit that you desire. It is important to remember that you are going to have to pay this money back just like you would a regular credit card.

Utilization

The fourth tip is to learn more information about credit utilization ration. It is never going to be a good idea for you to try to utilize all of your credit because it shows that you always want to max out on your limits. It is usually a good plan not to use more than 30 to 50 percent of your overall credit limit. Basically, this is going to the sum of all of the credit lines that you have combined together. It is important to remember that your credit score is not going to go down if you use more of the limit but it is also not going to rise as much as you might want it to either if you do.

Portfolio

The fifth tip is to establish a diverse credit portfolio. Even though you might think that clearing up all of the items and accounts off of your credit report is going to be the best way to clean business credit but if you have bad credit, you might not be able to get a business loan or a line of credit. Therefore, you can try to get between seven and fifteen different credit accounts to add to your personal credit profile. Of course, all of these accounts are going to need to be paid on time so that they are going to be in good standing. This is going to be for at least six months or more to count.