Imitation is the sincerest form of flattery. Small car dealership businesses trying to build up or improve their credit profile can do so my mimicking the characteristics of companies with good credit.
High Credit Score
Small businesses with good credit have high scores. Achieving a high credit score is a result of accumulating a strong credit history that is without negative factors.
Long Payment History
The optimal way to earn a high credit score and strong credit profile is to have a lengthy history of making payments to creditors and lenders. Payment history is one of the most significant factors in credit score models. A history of consistent, timely payments will go a long way toward building a good credit. Companies with good credit almost always have an extended payment history.
Multiple Credit Accounts
Companies with good credit frequently have multiple accounts. The reason is that several accounts (and various types of credit) demonstrate a company’s capability of servicing diverse lenders and creditors. Also, more credit provides greater opportunity to build a long payment history.
No Tax Liens, Judgments, or Collections
The absence of negative factors, such as tax liens, judgments, collections, bankruptcy, and other claims, is indicative of a company with good credit. The existence of one or more of these factors not only lowers a company’s credit score, it increases the financial risk that lenders are wary of.
Companies with good credit do not have a large number of inquiries. These are credit checks that are performed by lenders and other uses of credit information. A high number of inquiries are suggestive of a company that is frequently applying for credit, and possibly being turned down often (the reason why a high number of inquiries are being run). Small businesses should know that certain types of inquiries, like unsolicited promotional offers by credit card issuers, do not count against a credit profile.
There’s no secret formula for obtaining good credit. Any company can build a strong credit profile. New businesses, as well as those with less than stellar credit, should try to mirror those that have a high credit score.