According to a recent report by Experian, minority business owners are still struggling with credit in comparison to non-minority business owners. In fact, minority business owners have lower business and personal credit scores in comparison to other business owners. Having lower business and personal credit scores will make obtaining any type of debt financing to grow your small business a serious challenge. If you want to grow your minority owned small business and you’re having a difficult time obtaining capital because of your credit, your best bet is to do a few things that will help improve your credit score as quickly as possible. They include–
- Paying down your credit card balances – whether your business or personal credit cards are maxed out, it’s about time that you start paying more than the minimum. Paying off your credit card balances will reduce your total outstanding debt and increase your credit score.
- Paying bills in a timely manner – Avoid falling behind on your bills. For example, if you have credit cards and all you can afford to pay is the minimum, pay it on time so it doesn’t negatively affect your credit score.
- Taking on a little debt at a time – This is critical, especially if you plan on borrowing money to grow your business. Take on the amount of debt you can afford to pay back and make timely payments. Taking on more debt than you can handle will only ruin your credit and put you out of business.
Lenders Want to Help You
According to Pete Bolin, Experian’s Director of Consulting and Analytics, professionals in the financing industry want to help minority business owners succeed. Your success contributes to their success. However, the only way they can help minority business owners, is if we manage our credit well. Credit is the number one reason many minority business owners are declined for financing. If we can combat that problem, fewer minority business owners will see access to capital as a barrier to growing their business.