Keeping a restaurant going sometimes means taking out loans or using lines of credit to purchase new equipment, keep inventory in stock or expand your location.
When trying to secure these funds, a good business credit score is essential.
What Does Credit Score Indicate?
Three major credit bureaus handle business credit scores: Experian, Equifax and Dun & Bradstreet. Each has its own method of calculation, but all business credit is reported on a scale of zero to 100. A score of 75 or higher is considered to be excellent.
Every time you make a credit purchase, pay the balance on a loan or credit card or apply for business funding, it goes on your credit report. The credit score for your restaurant is associated with the tax ID you obtained when you got started.
Lending institutions use your credit score to determine whether or not to extend a loan or line of credit to your business.
Be Reasonable about Credit
Credit card use will fluctuate depending on the needs of your restaurant, but you should avoid racking up large amounts of debt at any one time.The more you rely on plastic to fund your business, the less capable you appear when it comes to money management.
Pay Down Your Debts
If you’re already dealing with big outstanding debts, make provision to pay them off as soon as possible.
Meet the deadlines for all of your payments, and do your best to pay more than the necessary minimum every month. This not only improves your credit score but also gets you out of the cycle of debt much more quickly so that you have extra money to reinvest in your restaurant.
Look Out for Errors
Not all of the information that the big three credit bureaus collect about your business is correct 100 percent of the time. It’s up to you to keep an eye on your statements and obtain a report of your credit score annually. If you discover discrepancies, contact the appropriate bureau with proof of the proper information.
Maintaining a good credit score for your restaurant increases your chances of success by making it easier to obtain credit cards, loans and business lines of credit as needed. By improving your financial standing, you help to ensure that you’ll always have the money you need to keep growing your business.
If you’re ready to find out whether you qualify for a business line of credit today please contact us to speak with a business loan consultant!