The success of your trucking company may depend on building and maintaining a good credit rating

Oh, no! You need a loan to help improve your cash flow or make a large purchase — like getting a new trailer — and your business’ credit score is too low for you to be approved. What can you do?

The good news is this is not a permanent situation. You can take steps today to improve it. One key thing to remember, though, is it will not happen overnight and it will take time and multiple tactics to see proof of your efforts.

Get a credit card for your business. Obtaining business credit cards can be easier than you may think. It will help your business’ credit score if you use a credit card tied to the business as opposed to your personal credit card. Once you get the credit card, make sure to use it and pay it off in full every month. Failure to do so will actually negatively impact your credit score.

Separate your credit and financials from your business. Separating your personal credit from your business is essential for many reasons, one of which is that if your personal credit is less than perfect, it can bring down your business’ overall score. So, take steps to separate your finances by only having personal bills come in your name and company bills come to the business.

Pay your bills on time or early. This is one of the most significant factors weighing on your credit score. The earlier you pay your bills, the higher the rating you receive, so always aim to pay your bills in full in advance of the due dates.

Setting up payment reminders can also help to ensure you will pay your bills before they are past due. There are easy ways to ensure you see the reminders even when you are on the road, such as setting up calendar reminders on your phone or payment reminders through your bank.

Monitor and check your credit report. It is essential to make sure things are being reported to the credit agencies correctly and the only way to ensure that is happening is if you monitor and check your credit reports. Several websites offer credit monitoring and checking for low to no cost. A simple Google search can help you get started.

Don’t overextend your credit. The credit bureaus check to make sure your debt-to-equity ratio is not overextended. If they believe that it is, your credit score will be negatively impacted. So, what can you do? It could be helpful to limit the number of credit cards and loans you have, sticking with just what you truly need and not just applying for a credit card because of a good initial offer.  Additionally, not maintaining high balances on your existing credit cards will help your debt-to-equity ratio.

In addition to these steps that you can take to build and improve your business’ credit score, there are things you can do to improve your cash flow getting you access to the cash you need when you need it. These can be good options for trucking companies to gain access to the funds they need while they build their credit as you don’t need perfect credit to be approved: 

Freight bill factoring. When you partner with a freight bill factoring company, they will pay you immediately for your freight bills. All you have to do is deliver your load, submit your freight bill to the factoring company, and then you get paid, eliminating the 30-day to 60-day — or more — wait for your customers to pay.

When looking for a freight bill factoring company, make sure to look for one that will act as a true partner and has your best interest in mind. To ensure this, look for factoring companies with no hidden fees, no application fees and no-cost, back-office support services including invoicing, processing, postage, collecting, credit checks and more.

Equipment leases. There are several different types of equipment leases you can take advantage of that can structure your payments in a way to increase your cash flow. From lowering your monthly payments to allowing for seasonal fluctuation in payment amounts, there is sure to be one that can benefit your business.

The key is to find an equipment leasing partner with an experienced team who will listen to your needs and customize a lease that addresses all of your business needs.

By taking these steps, you will be on the road to improving your business’ credit score. Unfortunately, it won’t happen overnight but might not take as long as you feared it could, either. There are options to bridge the gap in the meantime.

Jeremy Robison is president at Tetra Capital, an independent finance company offering freight bill factoring services to trucking companies of all sizes. His website is www.tetracapital.com.