How to Deal with a Bad Credit Score

It’s often said that a credit score is the most important number a business owner should keep track of. The score determines how the business is seen by the banks and other financial institutions and how easy it is to get a loan.

Those who have accumulated bad credit scores over the years of doing business shouldn’t despair about their situation. It’s possible to fix a bad credit score just by being responsible about your finances and addressing the problem head-on with a few simple measures.

How a bad credit score damages your business

There are a few ways a bad credit score can hurt you and your chances of starting a business. Most of the time, a bad score doesn’t mean that you can’t get a loan at all (although sometimes that happens too) – it just means that the rates you’ll have to pay will be significantly higher than you might expect.

Some businesses also tend to check your credit score before entering into partnerships or making a long-term deal. A bad score will make this deal harder because your business may seem less trustworthy.

Know your score

The first step toward rebuilding the credit score is keeping track of it as it is. There are a few agencies that can provide this data for you. It’s free to do once a year and there are fees if you plan to do it more often. They all use the same data, but it’s best to check with all of them in order to notice any discrepancies.

Spread these reports apart, so that you can get as much info as you need out of the first free reports. It’s best to check the score every six months in order to see the effects of your actions.

Taking out a loan

It may seem counter-intuitive to take out a loan when you’re trying to deal with a bad credit score, but that’s the whole point of the score – to prove that you’re trustworthy. There are accessible cash loans online that you can take out regardless of your credit score

These loans serve your main purposes. They allow you to cover your day-to-day expenses and keep your business running regardless of the credit score and they also improve the credit score itself if you return the sum in a timely manner.

Paying the bills on time

Paying the bills on time is a small matter but it means a lot in terms of repairing the credit score. There are usually only a few bills that you need to pay every month and just by doing it quickly and efficiently, you’re applying to get lower credit rates and often get the discounts on the bills themselves. If you fail to do so, you might have to look for credit repair companies such as those mentioned in online resources like The Mercury News (read more to find out). These companies can work directly with the credit bureau and identify discrepancies to get you on the path to an excellent credit score.

There are ways to automate this process and make it easier for yourself. Most banks and utility companies have apps that simply charge you for all the bills once a month and sometimes, there’s a small additional fee for that service as well.

Credit card balance

Credit card balance is usually the most important part of a good credit score or it can be the most damaging if you don’t pay attention to it. It’s the amount you owe to the credit card company based on how much you’ve borrowed but haven’t repaid.

The amount in your balance doesn’t have to be zero. Credit cards come with a limit and it’s best to keep your balance at about 30 percent of that amount. Banks also hesitate to issue loans to those who have a zero credit card ratings, which means that it’s best to use your card but to do it responsibly.


In the end, being in debt is the worst thing for your credit score, but it too can be remedied even before you return all the money that you owe. The first option is to set up a modified payment plan, which allows you to stretch out your payments a bit without affecting the rates or adding new fees.

If the bank doesn’t allow for such an option, there are always debt settlement plans that lower your score a bit more, but allow you to settle the debt at once, by paying a certain percentage of it right away. It’s usually 50 percent of the amount you owe.

A bad credit score can affect your finance, but there are ways to handle this, simply by being organized and honest. Sometimes, it’s also useful to take out a loan and rebuild your reputation.