Credit Score Fix Before You Start a Small Business in Canada

So you decided you want to start a small business in Canada, but you have bad credit. Well, you are not the only one. In fact, a large percentage of Canadians are in the same situations you.

When starting a small business, you in fact do need a credit score fix so we have taken the time to show you the problems, so you can overcome them and fix your situation. The main reason is that you don’t want to get in business (which costs a lot of money) while being in the negative. You want everything to start off positive, thus your credit score fix must be one of your proprieties before you start a small business. Consider the fact that you may need to visit a bank for a loan. Do you really want to be denied due to your credit score?

Credit Score Fix Before You Start a Small Business in Canada

Well before we get into the credit score fix, it is important for you to know the problems which originally create the issues with your score.

First problem: Missing your credit card payments 

Missing your payment is pretty bad. But every once in a while if you make a mistake, or you forget, it is natural. In the long-term picture, one or two missed credit card payments isn’t really a big deal. The real problem occurs when you regularly start missing payments.

This also depends how long you’ve had the credit card.

Consider that you just obtained a credit card, started using it and you miss your first two payments. How do you think the bank will look at your profile?

As a potential small business startup entrepreneur, consider it as if you were to hire an employee, but the employee doesn’t show up to work for the first few shifts. What would you think?

The longer you are with a credit card company, the more trust they have in you. This means that a late payment here and there will not impact your credit score much. But still something to try and avoid as much as possible because the more late payments you have (even if you are with the same credit card for ten years or more, they eventually start to look at you differently as well).

One way to avoid this problem is to schedule your payments to automatically be taken out of your bank account. This way, you can schedule just minimum payments to be made “so at lease they are not late”, at a later time, or whenever you can, pay off as much of your balance as possible.

Second problem: Having a lot of credit cards (and a lot of debt)

Your credit score may be affected two ways with this problem. First way is that you may have too many credit cards. Some consider having a lot of credit cards to be a good thing, but it all depends how you look at things. Signing up with credit cards from chain stores, online stores, every bank you do business with and other promotional stores may seem like they give you something in return such as “access to cash”, but they also give your credit score an alert, notifying the credit agency that you just applied for credit. If too much credit is given to you, it could eventually lead to you not being able to get more. Even if the credit card balances are low or at zero.

The second problem is that you start to use all of the credit cards and keep a balance on all. Again, depending on the way you look at it, this could be good or bad. Why bad?

If you have balances on any credit card where you use 75% of your credit card availability, the credit agency will be flagged and you will be monitored. This will slowly start to decrease your credit score as it shows the bank, and the credit agency that you aren’t “smart with your money”, especially if you aren’t paying off your balance.

The solution for a credit score fix is to keep your balance below 50%.

Or the best solution is to pay off your full balance each month in order to maintain the best credit score.

Keeping Your Credit Card Balance at 50% or Lower Is Best

Third problem: Unpaid Collections on your Credit Report

Sometimes you forget to pay certain bills. After some time, these businesses such as your utility bill companies or your cell phone bill company report to the credit agency. This hurts your credit score and your credit report. Why?

These business need their money. You forgot to pay, they are warning you.

Often, they can be paid on time to avoid this situation. Otherwise once your credit is affected, it may be too late. But a simple payment, and a call to the creditors will help you get rid of this from your credit score.

So now that you are aware of the problems, how do you fix your credit score in order to be able to start a small business?

• Make a plan to pay off your credit cards and your debt (schedule it)
• Automate all of your bills to withdraw/make payments on time from your bank
• If you have excess number of cards, combine your balance to 2-3 cards/loans
• Use a planner, apps and motivational assistance tools to help you pay off your debt
• Take the time to do it properly

It’s very simple in-fact. it just needs to be followed thoroughly, and a lot of time needs to be put into managing your finances properly.

At the end of the day, if you are unable to do it yourself, there is no shame in getting professional help.

If you plan on starting your small business, the sooner you fix your credit score, or get help towards fixing it, the sooner you can start your own small business and hopefully be debt free.