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Strategies for Improving Business Credit Reports After Debt Hardships

Strategies for Improving Business Credit Reports After Debt Hardships

Running a business can be tough, and sometimes things happen that lead to debt problems. If your business has gone through financial struggles, it may have hurt your business credit score. But don’t worry – there are strategies you can use to rebuild and improve your business credit report after debt hardships.

Understand the Problem

Before making a plan, you need to understand what’s dragging your score down. Get copies of your business credit reports from the major business credit bureaus – Experian, Equifax, and Dun & Bradstreet. Review them closely and note any late payments, collections, liens, judgments or other negative information. This will show you what issues need to be addressed.

Pay Down Debts

If possible, start paying down past due debts that show up on your business credit reports. Even if you can’t pay an account in full, making regular monthly payments can help. Many creditors will start reporting your account as “current” once you have a history of on-time payments. This can boost your score over time. Prioritize paying debts that are hurting your score the most first.

Dispute Incorrect Information

Errors can happen in business credit reports too. If you see any negative information that is incorrect or outdated, dispute it with the credit bureau. Provide documentation proving the information is wrong. The credit bureau must investigate within 30 days. If they can’t verify it, they have to remove it from your report.

Negotiate with Creditors

Contact creditors directly to negotiate pay-for-delete or goodwill deletion agreements. Offer to pay off the debt right away in exchange for having the negative item removed from your credit report. Many creditors will do this if you pay in full, since they’d rather have cash than keep reporting a delinquent account. Persistence and politeness go a long way here.

Add New Positive Accounts

Opening new responsible business accounts can offset old negatives on your credit reports. Apply for new store credit cards or lines of credit with favorable terms. Making on-time payments on new accounts will demonstrate you’ve changed your ways. Mixing new positive information in with the old negatives can improve your overall score.

Use Business Credit Cards Responsibly

One of the fastest ways to rebuild business credit is using company credit cards responsibly. Charge small amounts you can pay off each month. Never miss payments. Over time, on-time payments will counteract your history of late payments. Ask your issuer for limit increases periodically to lower your credit utilization ratio.

Become an Authorized User

Ask business partners or associates with excellent credit to add your company as an authorized user on one of their credit cards. Their good payment history will start appearing on your business credit reports. Being an authorized user is an easy way to piggyback good credit.

Wait It Out

Unfortunately, there are no quick fixes when rebuilding business credit. The impact of financial mistakes can linger for years. But negative information stays on your business credit report for a limited time. Usually delinquent accounts fall off your report after 3-7 years depending on the type. If you consistently demonstrate responsible behavior, your score will gradually improve as old negatives disappear.

Recovering from business debt problems and rebuilding credit takes time and discipline. But taking the right steps now will make it easier to get approved for financing and credit in the future. Be patient and persistent, and your business credit scores will head in the right direction. If you need help creating a customized credit repair plan, discuss your options with a business credit expert. With focus and commitment, you can rebuild your credit even after major setbacks.

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