How To Improve Your High-Risk Business’ Credit Rating

If your business falls into a high-risk industry such as Nutraceuticals, Document Preparation, CBD, Credit Repair, Moving Brokerage, Adult Entertainment, MOTO, etc., it’s extremely important that you keep your credit rating in good standing and your credit score as high as possible.

Poor credit history is one of the first things banks look at and judge harshly, when a business in a high-risk category is seeking a merchant account. In addition, a business’ credit history will continue to be a subject of interest to the banks even after your high-risk business has actually obtained your merchant account.

Being granted a merchant account is one thing. Keeping it is quite another and can be just as difficult if your business falls into a high-risk category.

Credit Scales Vary

Credit scores for businesses are calculated very differently from consumer scores and scales may vary widely from one credit reporting company to another.

For instance, Experian Intelliscore Plus and Dunn & Bradstreet Paydex are two of the most commonly used credit reporting companies for businesses and both utilize a scale of 1 to 100, wherein a credit score of 75 and up is considered good and lower risk.

However, the lower your score falls beneath 75, the higher risk banks will consider your company to be. Equifax, on the other hand, uses a very different ranking score ranging from 101 to 992, whereby a score of 550 or better is considered fair to good and a score below that places a company at a high-risk level for obtaining a merchant account from banks.

Steps To Take

There are many steps any company can and should take to improve its credit standing. This becomes especially important if your company falls into a high-risk category for obtaining and keeping its merchant accounts. For instance:

• Pay all of your bills on time. No exceptions. Late payment history will badly damage your credit score, so make sure to stay on top of the dates all payments are due and pay on schedule or early if possible.
• Routinely obtain your credit report from any of the credit reporting companies and check it on a regular basis. It’s important to know exactly what aspects of your credit history are lowering your score so you can actively concentrate and work on those areas in order to achieve improvement.
• Dispute any inaccuracies or errors you come across in your credit report by contacting the credit reporting company in writing. It is beyond important to make sure your credit report is accurate and paints a true picture of your credit history. You can pretty well rely solely on yourself to find mistakes and work to get them removed.
• Maintain a low credit utilization ratio, which measures the amount of credit you’re currently using against the amount of credit you have available. If you’re able to get your creditors to increase your credit limit, you’ll automatically improve your ratio. The lower your ratio is, the better and more stable you’ll look to the banks.
• When dealing with collection agencies, make achievable agreements with them to pay off your debts and stick to those agreements. Make sure the agency will agree to report your new and improved payment history to the credit reporting companies. Be sure to get this in writing from the collection agency. Continue to check your credit report to ensure this is actually being done.

As far as the banks are concerned, many industries are considered to be high-risk for obtaining merchant accounts for a wide variety of reasons.

There’s no way around that.

However, with the help of an experienced and knowledgeable high-risk merchant processing company such as us, First Card Payments, the more you can do to show that you’re running a reliable, responsible business with a decent credit history, the better able your business will be to obtain and keep your much needed merchant account.

Joyce Hope( Merchant Account Specialist )

Joyce Hope is a writer who specializes in merchant accounts. She has worked for First Card Payments since 2017.