Maintaining a healthy financial cash flow bears immense importance for any business. Regardless of the size, scale, and location, businesses need to watch their working capital to ensure smooth business operations continuously. Those who ignore their finances and credit can expect to face financial problems, which can hurt their business financially and cause irreparable damage to their reputation. The point is you need to stay true and fair to your vendors and stakeholders as business reputation builds on fair dealing and honesty. Good credit can put any business on the right track and help enable individuals and organizations to grow exponentially.
What’s important for a good credit score? Proper Tracking and Scheduling Of Credit
There is no denying the fact that most businesses consider credit cards and loans to be the only two things that affect their credit score. However, this is totally wrong! There are specific applications or late payment schedules that can hurt credit score as well. So, organizations need to identify those aspects that can hurt their good credit, and they need to come up with a relevant strategy or prevention plan to maintain and ensure their credit availability all the time. This indicates that proper tracking and scheduling of business expenses, including virtual payments, is important in maintaining a healthy financial lifecycle.
Keeping the things above in mind, it convinces me and makes me feel safe to say that ‘some of the finer points of credit scoring isn’t well-understood by most of the business owners.’ So, business owners need to educate themselves in maintaining and achieving a good credit score. Why? Because there are certain underlining factors other than credit card debt and loan that can lead to a negative impact on your good credit.
Those underlying factors include delayed payments, lack of incorporation of expense details into firm’s bookkeeping records on time, applying for more credit, transferring balances to a single card, canceling zero-balance credit cards, not having enough credit diversity, unpaid medical bills, unpaid parking tickets, renting a car without a credit card, applying for several credit cards at once, cosigning a loan or credit with someone else, not using a credit card at all and other similar things.
What Can Hurt Your Good Credit?
So, whatever expenses you make, they need to be duly tracked for maintaining a healthy working capital and credit. Here five things, as mentioned earlier in this article, can hurt your good credit.
Not Paying All of Your Bills on Time
Without a doubt, late payments or not paying all of your utility bills that include payments on rent, phone, utilities, and the loan can all negatively impact your credit score. So, you need to maintain a record of everything you pay, which means what goes in and out of your company, and when—only then, you can see the impact on your credit.
Canceling Zero-Balance Credit Cards
You need to hold onto it, even if you have paid off a credit card. Why? Because canceling zero-credit cards can hurt you two ways: it can shorten the age of your credit history, it reduces your total credit amount. The reduction means it can raise your credit utilization ratio.
Holding High Credit Card Balances
If your credit card balances continuously creep up towards your credit limit, then it will definitely hurt your good credit.
Tip: keeping your credit utilization ratio around 30% or less is better and favorable for your business credit in every sense.
Ignoring Your Credit Report
Undoubtedly, ignoring your credit report is bad news for your business, as doing this can lead to creating problems. So, you need to monitor and track your credit report to identify potential errors, which can hurt end up hurting your credit score.
Unpaid Medical Bills
If you forget to pay your medical bills or deliberately ignore them, then those bills can be sent to collection agencies for recovering bills, which can be added to your credit report.About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks™️ file, critical financial documents, and back-office tools in an efficient and secure environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.