Whenever you apply for a credit card, bank loan, or to any other type of commercial lender, you will be subject to a credit reference check. These credit reports inform a potential lender how much of a risk you pose based on how much credit you currently have and how punctual you have been with the repayments of your current debts.
Depending on your personal situation and the type of credit you are applying for, a poor credit score might not exclude you entirely from gaining credit, though it will almost certainly increase the interest rate you will have to pay on the loan.
What are credit reports?
For a book business, a poor credit report might have more impact than a personal one so it is important to ensure that yours is kept in as good a condition as possible. The report is basically a collection of data compiled on your spending history.
Credit bureaus (or credit reporting agencies) gather the information from as many sources as they can, including other lenders, landlords, and merchants, then sell that information to moneylenders and creditors.
If you are starting a new book business and have a bad credit history, any good finance book will tell you that it’s advisable to keep your personal and your business credit separate. To do this, sign up with a bank that is geared towards helping small businesses, then take out affordable loans using the tax ID of your business as opposed to your personal National Insurance number.
A credit report service will then log all those details and potential creditors will know that you pay your business credit on time and are therefore a good risk.
How can a credit report service help your business?
You must also be sure that your book business credit report is accurate and exactly how it is affecting the credit your business is eligible for. The best way to do this is free company credit reports, which will provide you with access to all the relevant information and allow you to make informed business decisions concerning your credit ratings and limits. You won’t have to be a financial expert to manage your credit profile, using their relatively straightforward dashboards.
You may be able to identify particular entries that might cause a problem and do something about them. You can challenge an entry that is incorrect or that has not been updated properly by the credit reference agency.
A business credit report service can also help you establish new book business credit and it is very easy and quick to do. They will use various tools to create a file for a new enterprise and for those with no existing credit rating.
Once this is done, they will then help you build your credit by exposing your information to credit bureaus. Your information is kept up-to-date so as long as you are paying your debts, you will increasingly be seen as a good credit risk.
You can also use credit reports if you are thinking of entering into a book business partnership, as it will provide you with all the relevant data to help you decide if it is a business relationship that is worth pursuing. If you offer credit as a part of your business, you can also check the credit ratings of potential clients to make sure they are in the habit of paying their debts, before you offer them credit.