Why Did My Business Credit Score Drop?

If you’re one of those businessmen who check their business credit score regularly, you would know that it keeps fluctuating with a change in the business credit report. Your company credit score comprises payment history, company information, financial performance, etc.

If you have currently reviewed your business credit report and found your score has increased or decreased, it could be due to errors, discrepancies, or any update in your business profile.

Many startup owners deal with the issue of having a drop in their business credit score. It could be due to irregularity in paying dues or having a heavy debt amount. The other time could be the errors and discrepancies that went ignored or unnoticed.

In this blog, we’ll discuss all these issues that could be the reason your business credit score drops every time you check it.

Delay in Payment

If you haven’t developed the habit of paying your vendors and suppliers on time, you better make it a habit. It affects your company credit report in India, and your score could stoop low due to this very reason. As an MSME, it’s understood that your business runs on a credit cycle. However, if you keep delaying payments for more than 30 days, your business credit score is affected. Moreover, you can be termed among business credit defaulters.

In another scenario where you’ve got an existing debt, and you put no effort in paying it off or reducing it, it can hamper your credit score and report. Therefore, it’s better to set alerts and reminders so that you don’t miss out on paying your customers on time.

Avoiding Errors and Discrepancies

Another reason your business credit score could drop is if you ignore checking your business credit report for errors and discrepancies. If you think the information given on your business credit report is obsolete or incorrect, you should immediately take it up with your business credit information bureau. It helps you avoid unnecessary fluctuation in your credit score.

New Credit Application

You may be surprised to know that if you apply for another business credit following the existing one, your inquiry gets updated on your company credit report in India, which, in turn, impacts your business credit score negatively. If you think you’re overwhelmed due to the existing debt and taking new credit is the solution, you need to reconsider your decision. Instead, find ways to grow your sales so that you can finish off the debt on time.

On a similar note, if you’ve given credit to other businesses and now finding it difficult to recover your money, you could face a debt phase in the near future. It doesn’t sound good for your business. In this case, you can report your business credit defaulters on the CreditQ platform and get help in the payment settlement process.

The idea behind it is to safeguard your business from fraud and let you follow a streamlined process in case you’re forming a partnership with a new client. It helps you in the long run as you don’t face any payment disputes and other financial debacles.