When you go to a surety provider for a bond, they are likely to size you up based on your credit score, financial history and the number of projects that you are taking on.
If you have a low credit score, poor financial history or are taking on multiple projects, then it can be difficult to secure a bond in the standard market. And you know what that means: no bond…no project.
Fortunately, there are options for contractors who are having trouble getting a bond…like getting a bond with Cinium.
But even so, you might be interested in learning how you can increase your “bondability”—or your ability to get bonded.
While you can’t go back and change your past, you can change your present and future. In order to increase your “bondability,” it’s important to try and increase your credit score, as well as effectively manage your finances and cash flow.
Doing so will have a domino effect—you’ll be able to take on more projects and expand your business opportunities.
So with that, here are seven ways that you can increase your credit score and bondability—and grow your business.
1. Know What Affects Your Credit Score
In order to improve your credit score, you have to know what affects your credit score. As you probably know by now, your payment history (and paying bills on time) plays a huge role in your credit score. But that’s not all.
Lenders also look at your credit utilization ratio (or the amount of credit that you have available compared to the amount that you use).
Likewise, your total available credit is another factor that influences your credit score, as is the length of your credit history (or the amount of time that you have been with creditors for).
2. Pay Your Bills on Time
Once you have a solid understanding of what impacts your credit score, it’s time to start improving that score.
Start by making sure that you are paying your business’ bills on time each month. A single late payment can decrease your FICO score by up to 100 points. A lower credit score and late payments leads to higher interest rates over time. And you definitely don’t want that.
3. But Don’t Pay Everything All at Once
When you get slammed with many bills at once, it can be tempting to pay everything right away. The problem with doing that is that you might find yourself hit with unexpected expenses later on that you’ll consequently be unable to cover.
You should always pay your bills on time or before they are due, but that doesn’t mean you have to pay all your bills months before they are due.
4. Keep Your Credit Balances Low
Up to 30% of your FICO score depends on your credit utilization ratio. So try to keep that ratio under 20%—if it’s much higher than this, then lenders are likely to see you as a risk and may not offer you a loan.
5. Keep Unused Accounts Open
Opening and closing accounts can hurt your credit rating. So even if you aren’t using a certain account, keep it open. The longevity can also help to improve your credit score over time.
6. Check Your Credit Score for Inconsistencies
Nearly 80% of credit reports have some faulty information. So check your credit on a regular basis for unusual activity or incorrect balances and statuses of your debts. And if you see something that doesn’t add up, contact the individual creditors about it and request a correction.
7. Let Us Help
At Cinium, we provide contractors with Requisition Cash Advances or up to 50% cash advances on approved requisitions for payroll or materials. As a result, contractors can negotiate discounts with vendors and improve their cash flow management.
Our Project Accounting Service helps to ensure that all bills and vendors are paid on time and helps to manage a project’s finances from start to finish.
And when payments are made on time, credit rating goes up…and bondability increases.
Want us to help you increase your credit score and bondability? Download an enrollment application today, or give us a call directly at 855.4.CINIUM.