Humans, by definition, aren't perfect, and it's normal for our credit histories to follow our example. As entrepreneurship is especially risky, the mistakes and rough patches small business owners inevitably endure tend to follow them around on their credit reports long after they've found success in their endeavors.
Unfortunately, poor credit can hurt an organization's ability to grow sustainably. Even with regular payments and strong cash flow, a credit report blemish can take years to overcome.
"Good business credit can be an important indicator for your company's credibility and believability," says Amber Colley, business credit expert at Dun & Bradstreet Credibility Corp.
"Good business credit can also be a determining factor as to whether or not potential partners may want to do business with a company, as well as with the cost of insurance premiums a company pays."
It's in a business owner's best interest to overcome an imperfect credit history. The process won't be easy, but it is possible to achieve. In order to do so, entrepreneurs should consider the following steps:
1. Make sure all information is up to date
The first step to resolving an imperfect credit history is research. Business owners should take the time to learn what factors may be causing the blemish and to examine fluctuations over time. This information will help business owners — and their financial advisers — identify and build a constructive path forward.
2. Take charge of your records
Colley explains that business owners can do more than watch and wait. She encourages entrepreneurs to maintain records of payment histories — especially ones made in advance.
A track record of successful and early payments, according to Colley, can help improve a business's credibility and reputation with some financial data providers.
3. Verify bad credit as accurate
Reporting mistakes can happen. That's why it's important for business owners to verify the accuracy of every single credit blemish.
"If it is not, request the credit bureau correct it," recommends entrepreneur and author William H. Joiner Jr.
A credit report should always be a two-way conversation with reporting agencies. As with a line of personal credit, business owners must take charge of their reputations.
4. Be patient and persistent
The road to successfully improving a poor credit report is not an expressway. Business owners should be prepared for setbacks, and shouldn't feel demoralized when their efforts don't immediately move the needle.
As Joiner explains, credit histories take time to repair. Business owners should be patient, persistent and optimistic in pursuing this long-term goal.
"There is no magical shortcut to good credit," says Joiner. "Good credit requires diligence and perseverance." Entrepreneurs are known for being creative, resourceful and innovative. Managing your company's credit history is no different. Don't be afraid to ask for help and be diligent about educating yourself. Research and patience will empower you to overcome any setback.
Insights on the top cash flow challenges business owners are facing today.
Browse All Articles »
Receive an email with featured articles and valuable insights for today’s business owners.
Give us a call at 1-855-762-2365 or fill out our simple form and a PNC Business Banking representative will get in touch with you.
Request a Contact »
PNC is a registered mark of The PNC Financial Services Group, Inc. (“PNC”). This article has been prepared for general information purposes by the author who is solely responsible for its contents. The opinions expressed in these articles are those of the author and do not necessarily reflect the opinions of PNC or any of its affiliates, directors, officers or employees. This article is not intended to provide legal, tax or accounting advice or to suggest that you engage in any specific transaction, including with respect to any securities of PNC, and does not purport to be comprehensive. Under no circumstances should any information contained in the presentation, the webinar or the materials presented be used or considered as an offer or commitment, or a solicitation of an offer or commitment, to participate in any particular transaction or strategy or should it be considered legal or tax advice. Any reliance upon any such information is solely and exclusively at your own risk. Please consult your own counsel, accountant or other advisor regarding your specific situation. Neither PNC Bank nor any other subsidiary of The PNC Financial Services Group, Inc., will be responsible for any consequences of reliance upon any opinion or statement contained here, or any omission. Banking and lending products and services, bank deposit products, and Treasury Management products and services for healthcare providers and payers are provided by PNC Bank, National Association, a wholly owned subsidiary of PNC and Member FDIC. Lending and leasing products and services, including card services and merchant services, as well as certain other banking products and services, may require credit approval.