May 16 Prevent your credit history from sabotaging your business
Your credit history can have a major impact on your business. Keeping the company’s finances healthy can help you obtain a loan to achieve your financial goals. Remember that credit can be an instrument that helps strengthen your company.
If you have a bad record you can sabotage your venture and lead it to failure. I share three main aspects that you must take care of in your history are:
# 1 Delays in your payments
Failure to cover the payment installments on the established date is reflected in your Credit Bureau. Financial institutions evaluate your credit history when requesting a new credit. This may affect you in the future and it will be more difficult to obtain financing. In addition, by delaying interest arrears are generated and in the end you will pay more for the credit you got.
# 2 Debts at the same time
Having multiple debts rises the risk of not being able to pay them. Before applying for a new credit, evaluate if it is really necessary and how it will impact the dynamics of your business. Over-indebtedness has a negative impact on your credit history and can slow down the growth of your business.
# 3 Raise your expenses
It is important that when applying for credit this does not exceed your income level. I recommend that the amount you request be less than three months of your income. This way you will have a margin to cover your installments and you will not lose liquidity.
It is necessary that you have a good control when prioritizing your payments according to your ability to pay (Net income- (expenses + savings) = ability to pay) to balance your finances more.
By taking care of these three points, your credit history will become an ally of your business. And you can get more benefits when you apply for new credits.
Constantly monitor your credit history will allow you to take action and create new strategies to improve the finances of your company. In Konfío we designed Kompás, a tool that will help you to know the direction of the finances of your business from any device and without cost.