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Crisis Survival Kit: 6 Steps To A Stronger Credit Application
At the dawn of this financial crisis, the big concern was access to credit. Growing unemployment, the ongoing dry heaves of the stock market, and quickening foreclosure rates have joined in the fray, yet access to credit remains a big question. If your business needs funds, will you be able to get it? Taking these 6 steps can bolster your credit application.
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At the dawn of this financial crisis, the big concern was access to credit. Growing unemployment, the ongoing dry heaves of the stock market, and quickening foreclosure rates have joined in the fray, yet access to credit remains a big question. If your business needs funds, will you be able to get it? Taking these 6 steps can bolster your credit application.These 6 credit tips come courtesy of Richard Flynn, SVP and GM of American Express' small business division American Express OPEN and also posted by Denise O'Berry of Small Business Cash Flow. His overlying point, which can't be overstated, is that business owners need to be strategic and actively involved in managing their credit. The implication being that credit is still available, if you know how to get it.
Flynn's tips for reinforcing a credit application split into an evenly matched couplet: before and after.
Before you apply for credit:
Clean up financials. Review your company profile and credit report regularly and immediately address any issues, mistakes, or irregularities in order to maintain your credit score.
Register your business. Register your business with commercial bureaus like Dun and Bradstreet and the Small Business Financial Exchange to make it easier for card issuers to confirm you are an established business.
Don't apply for too much credit. Too many credit requests can lower your credit score and negatively impact your ability to access credit.
Once you secure credit:
Practice good debt management. Borrow funds only for essential business purposes. "Good debt," such as purchasing new equipment, moving to a better location or hiring key staff, helps a business grow. "Bad debt" such as buying a new computer when your current computer is working well, adds to a business's monthly financial commitments but does little to up the revenue stream.
Pay all bills on time. Late payment on any bill may have a negative effect on your credit score. Remember, your personal credit and business credit are linked and both should be managed carefully.
Effectively manage cash flow. Your ability to pay bills depends on the cash that flows in and out of your business. Stay on top of accounts receivable and consider using a charge card to control business spending and expenses.
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