2 Ways That You Can Deal with a Poor Credit Rating

November 1, 2019 5:48 pm Published by Leave your thoughts
Dealing with a Poor Credit Rating

A poor credit rating can be a big hurdle to jump over, especially when you’re a small business owner. It can raise interest rates, impose restrictions and flat-out take financial opportunities away from you. The good news is that there are two ways that you can deal with your poor rating: build it back up and find alternative funding opportunities.

Consumer Credit Scores

There are two types of credit: consumer credit and business credit. A consumer credit score is tied to your personal credit. So, the credit card that you use to pay for your groceries or the line of credit that you took out for an expensive trip will be covered by this report. It considers factors like payment history, amounts owed and length of credit history before giving you a FICO Score between 300 and 850.

What are the general FICO score levels:

  • Excellent: 800-850
  • Very Good: 740-799
  • Good: 670-739
  • Fair: 580-669
  • Poor: 300-580

Business Credit Scores

A business credit score isn’t related to an owner’s consumer credit. It only has to do with the credit history of your business operation, factoring in business credit cards, lines of credit and bank loans. The report does not give you a standard FICO score between 300 and 850. Instead, a business credit report gives you a score between 0 and 100 — 0 is the worst possible rating and 100 is the best.

Here are some of the business decisions and financial habits that will shrink your score:

  • Missing payments
  • Making payments late (even by a day)
  • Closing past accounts
  • Opening new accounts
  • Maxing out credit cards
  • Ignoring credit cards completely

Consumer Credit and Business Credit Scores

While a consumer credit score is supposed to be personal, not professional, it can still affect business owners. Your ability to develop good business credit depends on your consumer credit score.

Do you need to go to a bank to ask for commercial funding? A low FICO score can get your application turned down. Do you need to apply for a business credit card? That same score will get you a card with sky-high interest rates. Do you need to rent equipment for your location? The rate will get steeper. 

Even before you’ve opened your business’s doors, you’ve reached a stumbling block. A low FICO score clearly makes it hard to create a healthy business credit history from the very beginning. Fixing your rating is essential for your consumer and business credit reports.  

How to Build Your Bad Credit Back up:

If you want to avoid business funding obstacles, you should try to improve bad business credit as soon as possible — and your consumer credit, too. The first thing that you should do is go through your reports to see if you spot any errors or inconsistencies. The smallest mistake could be affecting your overall score. When you find a problem, notify the credit bureau to make the correction.

Start by making payments on time — or, better yet, make payments early to boost your score. If you don’t have enough money to make the full payment, at least pay the minimum. Ignoring your bills is going to hurt your score.

Don’t stop using your credit altogether. Tossing your cards in a locked vault until everything is paid off isn’t the answer. You need to use the credit in order to build it up. The best way to use your cards is to put smaller expenses on it that you know you can pay off by the deadline.

Don’t push your credit limits. Try to keep your credit cards below the limit’s halfway mark. This method is a prevention tactic to stop you from maxing out your cards. It will save you from financial trouble and give your score a boost over time.

Look for Alternative Funding:

As you can see, a low credit score makes it extremely hard to access any funds from the bank. So, what can you do if you really need financial help for your business? Well, you can come to us for transparent business funding to prop up your short-term or long-term plans.

Options for Bad Credit

Owners don’t have to leave the website empty-handed when they have bad credit. They can still fill out applications and access important funds. We have set up several compromises to help them secure some financial support:

  • They can supply a cash down payment
  • They can provide collateral or assets
  • They can sign a personal guarantee (this works best for owners that have better personal credit scores than business credit scores)
  • They can accept a smaller amount of cash

All four of these options are available so that owners don’t feel debilitated by their credit ratings. They always have an opportunity to get funded.

Bank Only ACH Program

Owners will appreciate the opportunity to get a bank only ACH — this is a funding option based on the amount of daily or weekly sales that your business makes. The Bank Only ACH Program is excellent for owners that know that they would be rejected by a traditional bank. It’s easy to get approved for this funding option, and you can get access to the money in a hurry.

The greatest part about this program is that it doesn’t directly impact your credit score. So, if you’re trying to rebuild your score, you don’t have to regret getting funds for your business. You can practice your responsible credit habits and keep your operation running smoothly.

First Down Funding Is Here for You!

If you’re hoping to talk to loan experts in Baltimore about funding roadblocks and financing advice, you can always contact us. You can call us at (866) 644-1353 or send us an email at info@firstdownfunds.com. We’re happy to answer your questions and give you more details about our services.

A low credit score isn’t the end of the world. You can follow our simple tips to build up your score so that you don’t have to deal with financial roadblocks in the future. And in the meantime, you can use our alternative financing options to get access to the funds that you need to keep your business up and running.


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