The notion of credibility drives many of the decisions we make. From the brands we purchase to the financial institutions we choose to do business with, we are constantly making judgement calls about how “credible” or reliable a company, institution, or even a person may be.
This notion of credibility within the world of business could be based on a variety of things, including the personal interactions we have with company representatives, customer reviews and experiences we read or hear, or the delta between what’s promised in marketing and what’s delivered post-purchase.
If you’re a small business owner, the aforementioned are tantamount to gaining the respect of consumers and companies alike, but that’s not where the story ends. Your credibility will also be based on your business credit profile.
What does your business credit report say about you?
In the world of personal credit, consumers prove themselves by doing things like making car payments on time or responsibly managing credit cards (bills and balances alike). Doing so shows that they are reliable or, you guessed it, credible. This credibility is then translated into the almighty credit score. The same concept runs true for business owners.
A healthy business credit profile tells potential lenders, vendors and investors that a business or business owner is dependable and not a dangerous risk. For example, vendors will examine your score before extending your company trade credit. Lenders will likely do the same before considering your company for a sizeable loan.
So how do you make sure that your business credit reflects your business credibility? Great question. Here are some quick tips on how to increase the credibility of your business through savvy credit management:
1. Check your business credit report regularly. It’s not enough to simply know your business credit score. This is particularly true if you are currently working on building your business credit. The first step to improving a poor business credit profile or maintaining a good one is to keep an eye on your credit report and immediately address any blemishes (correct or incorrect) that may show up on it.
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2. Pay on time. Tired of hearing this one? Trust me, I am too, but the level of importance requires this tip be reiterated again and again. Why? A history of regular and timely bill payments should be considered the cornerstone of building solid business credit and credibility.
A credit report that reflects sporadic payments or a history of missed payments and defaults shows the business or business owner to be a considerable risk; this risk will more than likely translate to a perceived a lack of credibility and responsibility.
Here’s a pro tip: if you want an A+ on the credibility test, you should consider paying your bills early. The only way to get a perfect 100 Paydex score is by consistently paying your bills 30 days ahead of schedule.
3. Regularly do business with companies that report to top credit bureaus and agencies. Maintaining timely payments and actively building a solid trade relationship is fantastic in any respect, but if you’re not engaging with businesses that report your activity to the credit agencies, your hard work won’t be reflected.
As you select which companies you plan on doing business with, inquire about their trade reporting methods. Choosing at least one vendor that does report to credit reporting agencies will reflect the effort you put into regularly paying your debts onto your business credit report.
4. Maintain a healthy balance between credit availability and credit used. Having available credit can provide you with a financial cushion should you need it, but that doesn’t mean you should max out all lines of credit. Maintaining a healthy balance between what you can use and what you actually do use can be a great way to improve business credit and your credibility.
When combined with honesty, transparency, high customer service standards, and reliable product or service delivery, a good credit profile will boost your credibility with the very companies and businesses that you may rely on to successfully operate your business. As such, it’s imperative that your business credit become a top priority along with other characteristics that help you gain valuable respect in the business world.
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