Proven Ways To Improve Your Business Credit Score In Singapore

Proven Ways To Improve Your Business Credit Score In Singapore _ MediaOne Marketing Singapore

Hey there, business owners in Singapore! Are you tired of struggling to secure funding for your business because of a low credit score? 

If so, you’re not alone. 

Your credit score plays a big role in determining your financial stability and credibility with lenders and suppliers. 

And if you’re like most business owners, you probably want to improve your credit score to get better loan terms and interest rates. 

But let’s be real, improving your business credit score can seem like a daunting task.

But don’t worry, that’s why we’re here! In this blog post, we’re going to share with you some proven ways to improve your business credit score in Singapore. 

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Whether you’re just starting out or looking to boost your current score, these tips and strategies will help you achieve the creditworthiness your business deserves. 

So sit back, grab a cup of coffee and let’s get started on improving your business credit score together!

1. Timely Payment Of Bills

It’s crucial to be prompt while making bill payments. 

If your business’s credit score takes a hit due to overdue payments, getting the financing you need to expand and thrive may prove more challenging. 

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Thus, it is of utmost importance that you always pay your monthly expenses on time.

There are a number of ways in which overdue payments can damage your credit. Firstly, creditors can negatively affect your credit score by reporting your late payments. 

Your credit score is based on this data, and it is affected negatively by a pattern of late payments. 

Second, interest or late fees may be assessed for payments that are received after the due date. These charges can quickly accumulate, making it more challenging to meet future financial obligations on schedule.

As an added bonus, timely bill payment demonstrates your fiscal responsibility and competence to potential lenders and creditors. 

On the other hand, if you’ve always paid your bills on time, creditors and lenders will see you as less of a danger and be more eager to lend to you. 

However, if you have a record of making late payments, they may be less willing to extend credit to you or may impose stricter terms on any loans that are extended to you.

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Automatic bill payments through your bank or credit card can help you avoid late fees and ensure that your bills are always paid on time. In this approach, you can avoid late fees and guarantee the payment will be completed on time even if you forget. 

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To ensure that you pay your bills on time, you can set up alerts in your calendar or receive reminders via email.

Making and sticking to a budget is another useful business approach

Keeping tabs on your monthly outlays and receipts will help you better understand your financial condition and plan accordingly. 

Making sure that your rent/mortgage payment, utilities, and credit card payments are all paid on time is another option.

Finally, if you are late with a payment, you should take immediate action. Get in touch with the creditor and see if they can help you out. 

It’s always a good idea to contact your creditors, as they may be prepared to negotiate a payment plan with you or even waive late fees.

2. Maintain a Low Credit Utilisation Ratio

Maintain a Low Credit Utilisation Ratio | MediaOne Marketing Singapore

A significant factor that might influence your company’s credit score is the credit utilisation ratio. 

The ratio of your total credit card balances to your total credit limits is a major factor in establishing your credit score. 

One way to boost your credit score and show financial responsibility to lenders and creditors is to keep your credit utilisation ratio low.

To determine your credit use ratio, divide your entire credit card balance by your total credit limit. 

A credit usage ratio of 30% would be achieved if a person with a $10,000 credit limit has used only $3,000 of that credit. It is advised that a person’s credit utilisation ratio not exceed 30%.

If you have a lot of debt relative to how much credit you have, your creditors and lenders may see you as a riskier borrower. 

Because of this, your credit rating may suffer. 

But if your ratio of credit used to available credit is low, it shows that you are good with money and can borrow responsibly.

Several strategies exist for keeping the ratio of available credit to total purchases low. For starters, you can improve your credit score by paying off your credit card accounts in full before applying for new credit. 

As a result, your credit usage ratio may decrease, which is good news for your score. Second, if you are able to appropriately handle more financial freedom, you may want to consider raising your credit limit. 

An increase in your credit limit will help you lower your credit utilisation ratio, which in turn can raise your credit score.

Limiting your use of credit cards is another strategy for keeping your utilisation ratio low. Keep an eye on your monthly expenditures to ensure you don’t go over a predetermined proportion of your credit limit. 

Remember, to help keep your credit usage ratio low, which is a key factor in determining your credit score.

3. Use a Mix of Credit Types

Your company’s credit score can be improved significantly by taking advantage of a wide variety of credit opportunities. 

You can demonstrate to lenders and creditors that you are a good borrower by using a variety of credit kinds. 

This can show that you are capable of managing different forms of credit and that you are a responsible borrower.

A business loan is one option for you to consider while looking for credit. When you don’t have enough cash on hand, this might help you manage your business bills or finance a significant purchase, such as new equipment or real estate. 

It can also help you finance a large purchase. Improving your credit score and proving to potential lenders and creditors that you are a trustworthy borrower can be accomplished by promptly repaying a loan obtained for your company.

A credit card is yet another option for you to consider when looking for credit. 

Making low-value transactions and keeping track of your expenditures can be made easier with the help of a credit card for your company. 

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If you want to increase your credit score, paying your credit card bills on time and in full is essential, just as it is when applying for a loan for your company.

As a final option, you might also think about making use of a line of credit. 

With a line of credit, you have access to a predetermined amount of credit, from which you can withdraw money as needed. 

This particular kind of credit can be an effective instrument for managing one’s financial flow and absorbing unanticipated costs and expenses. 

Your credit score can benefit from prompt and complete repayment of a line of credit, as this demonstrates to potential lenders and creditors that you are a responsible borrower who can be trusted with their money.

It is essential to keep in mind that making use of a variety of credit types does not necessitate simultaneously maintaining a number of different kinds of credit. 

You may choose to begin with one kind of credit and then expand into others as your company develops and your requirements for credit shift. 

Regardless of the form of credit you use, the most important thing is to make responsible use of it and pay it back on time.

4. Monitor Your Credit Report Regularly

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One of the most important things you can do to improve your company’s credit score is to keep a close eye on your credit report. 

Your credit report is a record of your credit history and includes information on your credit accounts, payment history, and any inquiries that have been made regarding your credit. 

It is imperative that you check your credit report on a frequent basis in order to verify that the information it contains is correct and up to date.

If there are mistakes on your credit report, they can have a negative influence on your credit score and make it more difficult for you to obtain new credit or obtain a good interest rate. 

Even if the information is not factual, it might nevertheless have a negative impact on your credit score. 

For instance, inaccurate information regarding late payments or a high credit utilisation ratio can have this effect. 

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If you routinely examine your credit report, you will be able to spot and rectify any problems in it before they become a problem for you.

Once a year, you have the right to submit a request for a free copy of your credit report to one of the credit bureaus, such as Equifax or TransUnion. 

Doing so will allow you to better monitor your credit report. 

You also have the option of enrolling in a credit monitoring service that will keep you apprised of any modifications made to your credit reports, such as the addition of new accounts or rigorous research.

Once you have obtained a copy of your credit report, it is vital that you examine it thoroughly and search for any mistakes or inaccurate information. 

In the event that you discover any errors, you have the right to dispute them with the credit bureau and request that they be rectified. 

It is crucial to get any errors repaired as quickly as possible in order to improve your credit score, but this procedure can take some time.

Monitoring your credit score is just as essential as keeping an eye on your credit report when it comes to managing your financial future. 

A credit score is a number that describes your credit risk based on the information that is contained in your credit report. 

Your credit score may be found on your credit report. 

Your likelihood of being granted additional credit and your ability to negotiate a more favourable interest rate can both improve if you have a good credit score. 

A poor credit score might make it more challenging to gain access to fresh credit and can also make it more challenging to obtain a good interest rate.

5. Avoid Opening Too Many New Credit Accounts at Once

Avoid Opening Too Many New Credit Accounts at Once | MediaOne Marketing Singapore

Opening an excessive number of new credit accounts all at once can have a negative impact on your company’s credit score. 

When you apply for new credit, a hard inquiry will be added to your credit report. This happens automatically. 

Hard inquiries are a record of when a lender or creditor analyses your credit report. 

These inquiries can have a negative influence on your credit score. 

Hard inquiries are also known as “inquiries with a hard pull.”

If you apply for a significant amount of new credit all at once, it may give the impression that you are having financial difficulties or that you are taking on an excessive amount of debt. 

Your credit score may decline as a result of this, making it more challenging for you to gain access to new credit or obtain a favourable interest rate.

It is crucial to be aware of how many new credit accounts you are creating and to only apply for credit when you truly require it in order to prevent this situation. 

Keeping track of how many new credit accounts you are opening can help you avoid this. 

If you need to open a new credit account, such as a business loan or a credit card, make sure to examine all of your available alternatives and pick the one that will serve your company in the most effective manner.

It is also essential to make responsible usage of newly opened credit accounts. 

This entails not just making payments on time but also maintaining a low credit utilisation ratio and preventing your credit limit from being exhausted. 

You can help develop a positive credit history and boost your credit score over time by utilising credit in a responsible manner and making payments on time.

6. Avoid Maxing Out Credit Cards

Your company’s credit score could take a hit if you use up all of your available credit. 

A significant portion of your credit score is determined by your credit utilisation ratio, often known as the ratio of the amount of credit you are currently using to the total credit limit that is available to you. 

If you use all of the available credit on your credit cards, it may appear that you have a significant amount of debt, which can have a negative impact on your credit score.

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In addition to having an effect on your credit score, using your credit cards up to their maximum limits can also result in high-interest rates and other fees. 

The interest rates on credit cards can be quite high, and the costs associated with carrying a significant balance from one month to the next can pile up very rapidly.

It is imperative that you only use credit when you absolutely require it and that you pay your bills on time in order to avoid maxing out your credit cards and causing damage to your credit score. 

You should also make it a priority to maintain a low credit usage ratio—ideally one that is lower than 30 percent. 

This means that you are utilising less than 30 percent of the total credit limit that is available on each of your credit cards.

It’s a good idea to pay off your credit card balances in full every month if you want to keep your credit utilisation ratio low. 

Because of this, you won’t have to worry about carrying a load from one month to the next, and your credit utilisation ratio will remain at a manageable level as a result. 

You might also consider getting a personal loan or consolidating all of your debt onto a single card in order to pay down your existing credit card balances. 

This can assist you in streamlining your debt and maintaining a low level of credit use.

7. Seek Professional Help If Needed

Seek Professional Help If Needed | MediaOne Marketing Singapore

Managing your personal finances can be difficult, particularly for owners of small businesses who sometimes have to wear multiple hats and are responsible for a wide range of tasks. 

If you are having problems boosting your company credit score and managing your finances, it may be beneficial to seek the assistance of a professional.

You can improve your current financial status with the assistance of financial advisors and credit counsellors, who can give you individualised advice and direction to help you make financial decisions. 

They are able to guide you through the process of developing a budget, going over your credit report, and finding solutions to lower your debt and improve your credit score.

A financial counsellor can assist you in formulating a strategy to rank the importance of your various expenditures and identify opportunities for cost-cutting if you are having problems meeting your financial obligations. 

They may also assist you with the creation of a savings plan, which will allow you to build up an emergency fund and be better prepared for unanticipated costs.

Credit counsellors can also assist you to learn how to make responsible use of credit and how to avoid making the typical mistakes that consumers make with their finances. 

They are able to assist you in formulating a strategy for paying off your debt, negotiating for reduced interest rates, and improving your credit score.

When looking for professional assistance, it is essential to select a financial advisor or credit counsellor that has a solid reputation in the industry. 

If you want to identify a reliable service, you can check with organisations like the Better Business Bureau or the National Foundation for Credit Counseling.

Why Its Important To Improve Business Credit Score In Singapore?

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In Singapore, it is essential, for a variety of reasons, to work towards improving the credit score of your company. 

Your business’s credit score is a measurement of how trustworthy and financially responsible your company is, and it plays a significant role in determining whether or not you will be authorised for loans, lines of credit, and other forms of funding. 

The following is a list of some of the most important reasons why it is essential to increase your company’s credit score in Singapore:

  • Availability of sources of funding: Your chances of being authorised for various forms of funding, such as loans, lines of credit, and even credit cards, can be improved by maintaining a solid credit score for your company. This might be of utmost significance for proprietors of small businesses who, in order to expand their companies, require access to various forms of money. If you have a solid credit score for your company, lenders and financial institutions will view you as a responsible borrower who is less likely to default on a loan. This will increase the likelihood that you will be approved for funding, which will allow you to grow your company.
  • Bring down the interest rates: There is a correlation between having a strong credit score for your company and being able to obtain cheaper interest rates on loans and credit lines. This can end up saving you a significant amount of money over time and help you better control the flow of cash through your business.
  • Stronger negotiating position: When it comes to negotiating with suppliers and vendors, having a good credit score for your company might provide you with greater bargaining leverage. If you have a solid business credit score, your suppliers and vendors will be more willing to issue a credit to you. This might give you more freedom to manage your cash flow and make purchases when you need them.
  • Improved standing in the community: Having a high credit score for your company can lend more credibility to your firm and improve its reputation among customers. It can demonstrate to consumers, suppliers, and other stakeholders that your company is trustworthy and able to maintain its financial stability.
  • Enhanced ties with one’s suppliers: If you have a strong credit score for your company, it will be easier for you to build strong relationships with your vendors and suppliers. If they are aware that you are a competent and trustworthy business owner who is less likely to default on payments, then it is possible that they will be more ready to collaborate with you.

To summarise, raising your company’s credit score in Singapore is essential for a variety of reasons, some of which include enhanced access to finance, cheaper interest rates, improved bargaining power, increased credibility, and improved connections with vendors. 

You can raise the likelihood of having your application for business financing granted, which will ultimately assist your company in expanding its operations and achieving greater levels of success.

About the Author

Tom Koh

Tom is the CEO and Principal Consultant of MediaOne, a leading digital marketing agency. He has consulted for MNCs like Canon, Maybank, Capitaland, SingTel, ST Engineering, WWF, Cambridge University, as well as Government organisations like Enterprise Singapore, Ministry of Law, National Galleries, NTUC, e2i, SingHealth. His articles are published and referenced in CNA, Straits Times, MoneyFM, Financial Times, Yahoo! Finance, Hubspot, Zendesk, CIO Advisor.

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