A high credit score is a fantastic asset to any business. Companies and individuals who are seen as being totally credit worthy are often able to get preferential rates on loans, credit cards and other financial services. The fact they are seen as low risk gives them the opportunity to save hundreds and sometimes thousands of dollars compared to those who score lower down the scale.
A relatively easy way to improve your credit score is to take out a small business secured credit card. In order to obtain such a card you first have to hand the issuer a cash deposit. This money is held in a special account as collateral and you are then issued a card with a limit equivalent to however much money you have deposited.
Although it works just like a regular credit card and you make monthly payments to repay whatever you have spent, you are technically never in the red because you are unable to spend more than the sum in your special savings account.
Most of the main secured credit card providers will report on your financial activity to the three credit bureaus. After six to twelve months of making payments on time, your scores will start to rise. In many cases the first sign of this is that you begin to get offers from other credit card companies that want you as a customer on a non-secured basis.
Not all cards report to the credit bureaus and it is important to check in advance whether the one you are applying for does. If not, then no matter how promptly you pay or how often you clear the entire balance, your credit score will not change one iota.
So long as you choose the right provider, a secured credit card can be a key factor in rebuilding a credit rating. A year of solid, responsible use shows other financial institutions exactly what they want to see – that you are reliable and therefore worthy of a far better deal.