‘To contract new debts is not the way to pay the old ones’, this quote by George Washington the 1^st American president makes it clear that borrowing money from new creditors to pay debts owed to existing ones is not the best way to deal with your financial obligations. Credit rating or the credit score of your companies is an often overlooked topic when it comes to debt and debt management. Credit rating calculates the credit-worthiness of your company and it helps banking institutions to decide whether or not to give you loans and it helps potential investors to decide on the feasibility of investing in your company. Your credit rating is a financial snapshot of your business. Simply defined credit rating estimates the ability of a person or an organization to fulfill their financial obligations by looking into their previous dealings.

Recently, the credit score of a company is considered as one of the important benchmark used by investors to make their investment decisions. Your credit score will generally fall between 850 to 300 with anything above 750 considered excellent and anything below 600 to be poor. There are certain steps that you could use to improve your companies credit rating. Now let’ look into it.

Paying your Bills on Time: One of the best-proven ways to improve your companies credit rating is to be punctual when it comes to paying your bills. In fact credit rating agencies often use your payment history to calculate your credit score.

Paying a little Extra Each Time On Your Outstanding Debt: The implementation of this method will actually help your company to reduce your overall debt load and to pay off your balances faster. This will also give the impression that you are more than capable of paying off your debts which will later improve your companies credit rating.

Work on Paying Off Your Debt: This may seem an obvious option but in reality many companies move their debt around without actually paying it off. This is another important criterion used to calculate your credit rating. By paying off your debt rather than moving it around you can also reduce your credit utilization rate which is a good thing.

Monitor Your Credit Report Constantly: It is crucial that you check and correct any mistakes in your credit report as quickly as possible. Any wrong or misleading information in your credit report will affect your credit score. If you find any corrupt information in your credit report immediately inform the credit bureau to take down that information.

Importance of Having A Good Mix of Debt: A recent study by FICO shows that investors and money lenders opt the companies who have a good mix of debt rather than the companies having a single type of debt. Various types of debt include mortgage loans, bank credit cards, installment loans and various retail credit cards. If you want to improve your credit rating the goal is to have a good and diverse debt mix.

Knowing Where You Stand And Where You Want to Go: The most effective way to improve your credit rating is to understand your current financial position. Then with proper implementation of the above-mentioned techniques you can achieve the goal of improving your companies credit rating and the overall credit score.

The need to borrow money and to have credit is an obvious part of every business. The goal is optimum utilization of your credit to improve your business and paying off that credit with as little over dues as possible. If you are a company with a good credit score then credit rating will help you to attract potential investments. We hope that this article will help you to improve the credit rating of your company.