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How To Improve Your Company's Credit Rating

Aug 17, 2007
What is a Credit Rating? What are the benefits of a good rating? What are the consequences of a bad rating? How does a company improve its rating? The answers to these questions are vital to the survival and growth of any corporation. Credit is an indicator that reflects how well a company manages its finances. By having a look at a company's rating, people can obtain a lot of information regarding a business organization and particularly the payments made by that organization. There are several bureaus that compile this kind of information and sell it to their clients.

Advantages of Having Good Rating
There are several benefits to having a good rating. Gone are the days when having it was considered a luxury. Today it is a necessity. A company that has it is in a far better place than one that has a bad rating. For example, buying a new property is far easier for those organizations that have it. These business organizations also possess an advantage when they want to buy a new car, try to get a credit card, or wish to make big investments for the further growth of their businesses.

How to Improve the Rating of Your Organization
To improve the rating of any corporation the company needs to increase its credit score. If the person who is managing the financial matters is cautious enough to pay all the bills on time, that person is doing the best thing possible to achieve it. On the contrary, if that person makes payments late, not only does it adversely affect the company's rating, but the added interest makes the organization indebted for a longer period for time. If a person finds it difficult to pay according to the present schedule, that person can ask to sit with the creditors and reschedule payment dates.

Whatever efforts a company makes to increase its rating its efforts will not be in the vain. Whenever the company needs extra money in the future, it will be able to get that money. Furthermore, the company will get the money at a lower interest rate than those organizations that have a bad rating. Similarly, getting mortgage loans or car loans also becomes easier to companies with a good history.

Converting A Rating To A Good One
Even if past mistakes have made the rating poor, there is always a chance to improve. However, to rebuild it, the financial management team should have all the relevant information about it and how it got to be in its present condition.

There are several computer software packages available in the market, which can help a lot in this regard. The law permits a company to convert the bad rating to a good one and repair the damage done by a poor history of repayment. According to the latest regulations, credit bureaus must wipe out negative remarks about an organization's report after a certain period of time. A company's management team can argue with them regarding any information that it feels is objectionable. The bureaus must delete it if they cannot verify all the information.
About the Author
David Gass is President of Business Credit Services, Inc. His company publishes a free weekly e-newsletter on Small Business Consulting at their
web site http://www.smallbusinessconsulting.com
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