Eight Credit Management Tips for Entrepreneurs

Setting up your own small business can be a hugely exciting step forward in your career. But, whilst looking after your credit managementbusiness finances is extremely important, you also need to make sure that your personal finances are in order to truly make the most of your new business venture. A poor credit rating can hold an entrepreneur back in several ways, leaving them struggling to get business funding through the regular methods, or dealing with debt stress and anxieties whilst trying to grow a brand. As an entrepreneur, taking the time to improve your credit score and minimise your debt levels will not only benefit you personally but also impact your business in a positive way. Read on for our top credit score improvement tips for entrepreneurs.

#1. Monitor Your Credit Score:

The first step to improving your credit score is getting to know and understand it. In Spain, the main credit reporting agency is ASNEF. Files are managed by Equifax, but you can access your credit file via the Einforma website. Once you’ve gained access to your credit score, you should go through it carefully to ensure that all the information is correct and up-to-date. Bear in mind that even the smallest of mistakes can bring your credit score down, so be thorough and always chase up anything that doesn’t seem right.

#2. Pay off Smaller Debts:

A poor credit score is often due to having more debt than you can comfortably afford to pay off. As an entrepreneur, this will not only harm your ability to get more personal credit in the future but also affect your likelihood of getting funding for your small business. In addition, dealing with high debt levels can put entrepreneurs under significantly more stress, making it harder to stay focused on building and growing your business. Start with any smaller debts and pay as many off as you can to gradually bring your debt level down. Each time you pay a debt off in full, this will be recorded on your credit report and eventually increase your score. Don’t be worried if your score isn’t improving straight away – it usually takes at least a few months to show.

#3. Speak to Your Creditors:

If you’re in a significant amount of debt, which is affecting your credit score, it’s crucial to communicate with your creditors so that you can come to an agreement which is suitable for both parties. Bear in mind that although your creditors’ main aim is to get their money back, most will not expect you to get into financial difficulties and may be able to accept reduced payments or freeze interest until you are in a better financial position. Get in touch with your creditors and explain your situation to them; this will help you avoid any missed, late, or partial payments showing up on your credit report.

#4. Use Your Credit Card Wisely:

A credit card can be a hugely useful tool for building your credit score, but it can also bring it down significantly if not used wisely. To start improving your credit score, begin by paying off as much of your credit card balance as possible. For best results, you should aim to only use up to 50% of the available credit at any one time. For example, if you have a credit card with 2,000 Euros available, you should never spend more than 1,000 Euros until you’ve repaid at least some of what you owe. When spending, try to stick to using your credit card only for essentials that you’re sure you can repay. For example, groceries and gas are a good example of what you can use your credit card for to improve your history. If you can repay the whole balance each month, that’s even better.

#5. Try a Short-Term Loan:

A short-term loan can be easier to get accepted for, and a useful alternative if you’re in need of some short-term cash to cover an emergency expense. However, bear in mind that most short-term loans will need to be repaid within just a few months, so make sure that you’re going to be able to afford the repayments before you commit to borrowing. Since it’s easier to repay a short-term loan in full quickly, it’s a quick way to boost your credit score as long as you approach it carefully. Follow the link to learn more about which short-term loan options are available to you.

#6. Ask for a Credit Limit Increase:

If you have an established history of repaying your debt on time, you might want to consider asking your credit card provider to increase your credit limit. Putting your credit limit up is a clear indicator that your creditor trusts you to borrow even more money, usually due to a strong history of responsible borrowing and repayments. Because of this, getting a credit limit increase, no matter how small, can automatically boost your credit score by improving your credit usage ratio.

#7. Avoid Using Credit:

Although it’s important to have some history of repaying debts, there’s a fine line between using and overusing credit. To best improve your credit score, it’s important to approach the idea of using credit sparingly. If possible, avoiding using your available credit for a while can give your score a push upwards. Having available credit that you don’t use very often, if at all, can actually work in your favor when credit checked. This is because it shows you’re able to afford your living expenses without relying on credit and are, therefore, more likely to be able to make repayments.

 #8. Ask for Help:

Lastly, don’t be ashamed to ask for help if you’re struggling with debt or improving your credit score. There are many charities, companies, and independent financial advisors available to help you, or you may be able to find the assistance that you need in the form of a financial tracking app or software package.

About Nate Goodman

USA TODAY BESTSELLING AUTHOR Nathan Goodman is a freelance fiction writer and the author behind The Special Agent Jana Baker Spy-Thriller Series. "A terrorist on the loose, a country in panic, and time is running out..." FOR A FREE COPY of book one, visit the author's website.