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What is Credit Score and how does it work?

The Credit Score is a rating that determines the probability that a person or company has to pay its obligations. It is based on factors such as the use and balance of your credits, among others. In short, financial institutions know in advance if we are good at managing our debts.

To make it more clear! The Credit Score summarizes your risk quality or that of your company, according to credit experience, through the historical evaluation of your payment behavior and that of your company.

The Credit Score reflects how good the behavior of your company has been in relation to the credits it has or has had with banks, cooperatives and commercial establishments. If the payment behavior of your company has been impeccable; you will get the best score.

However, keep in mind that the Credit Score is built based on the good financial practices that your company or business manages, such as:

  • Punctuality in payments.
  • Income stability.
  • Proper use of rotating quotas.
  • Among others.

Although there are many interpretations about its usefulness, the truth is that the Credit Scores is the best tool for the financial planning of a company. Maintaining a good rating keeps us from appearing negatively reported by credit bureaus such as DataCrédito.

Advantages of maintaining a good Credit Score in your company

The score summarizes in a single score many factors of our credit profile, which directly affect our level of credit attractiveness and risk, for the market that grants it. Therefore, staying financially healthy and demonstrating good payment habits will be the gateway to financial market opportunities. That is why we are going to mention some advantages of maintaining a good Credit Score:

  • It opens new doors in the financial market and in all entities that grant credit.
  • A high Credit Score allows you to save money.
  • Access to a better offer of financial products.
  • Among other benefits.

Financial health to strengthen your business in 3 easy steps

The reality of today, given the situation of the pandemic, is that the market has once again gained momentum to begin to have a relationship, especially in this second half of 2021. For this, it is important that Colombian businessmen are prepared and take advantage of the opportunities that may arise in the growth of their businesses and companies.

In that sense, what better way to do it than to access financing programs or credits, in order to catapult these opportunities that are coming or that are expected for the economic growth of the following months in Colombia and the world.

If you are looking for loans as an entrepreneur and would like to understand what is best for you, but when you knock on the door of an entity they mention that you must make an initial deposit as part of the process to access the loan. This should raise alarms, because it is most likely a fraud.

Making good use of credit opens the doors of your company to financing, with better conditions and allows you to improve your financial situation and that of your company in the future.

How to adjust the loan characteristic you are looking for?

Businesses such as small restaurants, entertainment, food, etc., need to find financial products that adapt to their production cycles, within the framework of their economic activity. For this, it is key to make good use of resources and generate a good payment culture with financial institutions, so that the company or business can access better financial products in the future.

Remember that institutions in general, when they see that customers have a good credit history, offer better conditions.

You might also be interested in: What are the processes for your company to grant credit with confidence?

How to continue managing recurring financing to strengthen my business?

For this point it is important that the products offered by your company or business have lines of credit, where entrepreneurs or independent workers can access resources when they need them. It is not that every time the company needs financing, it is necessary to go and knock on the door of the entity, so that they generate new resources for your business.

Having access to these financial products on a recurring basis is what can lead us to strengthen the business and “catapult” it in the long term. Therefore, making frequent and recurring use of financing will be the key tool to take your business to the next level.

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