There are many pitfalls to avoid when starting a business. Perhaps one of the easiest to fall into and most difficult to get out of is credit card debt, and consequently, bad business credit. The total outstanding U.S. consumer credit card debt is approximately $3.9 trillion, and in a world where credit card debt plagues so many people, climbing out of the perpetual dark hole of debt can often seem like an impossible task.
But the future of one’s business doesn’t have to be bleak. While credit card debt won’t disappear overnight, there are tangible steps to take that can rebuild bad credit and get a business back on the right track.
Open New Accounts
Many business owners have poor credit because of credit card debt. So, while suggesting that opening a few new credit card accounts may sound counterintuitive, using credit wisely is one of the best ways to help build a credit score. It’s true that it can be difficult to secure a new credit card with existing bad credit, but considering something like a gas card or a secured credit card may be the first steps that need to be taken to help build one’s credit back up.
The important thing to remember is only open a few accounts. Hoping to rebuild credit by opening a lot of new credit card accounts is the quickest way people often fall into even more debt, causing one’s existing credit score to plummet all the more.
Building New Habits Rebuilds A Credit Score
The way most businesses fall into bad credit is by having bad habits. Often, business owners can end up leveraging too much of their business, not having set payment dates, and buying business related items that are out of the budget. The trick is to charge only what you can afford, pay it off every month, and continue that trend.
Truthfully, the best way to get out of bad credit is by never falling into it. If one can learn to build and maintain good spending habits from the start, then it will be a much less financially tumultuous road they will have to face in the future.
Take Out a Business Loan
Another way to help pay off credit card debt is by taking out a business loan. Taking out a business loan to help pay off debt and reclaim financial stability is a great way to relieve some of the burdens of financial struggles. While criteria will often need to be met to qualify for a loan, taking out a loan and paying off debt is a great way to invest in one’s business and rebuild their credit score in a healthy, fiscally responsible, and maintainable way.