There are few things more important to your financial health than your credit score. The difference between a good and bad credit score can determine anything from your mortgage rate to being approved for cable service or even a cell phone. If you manage to get approved for credit with a low score, you will pay a premium. The interest rate for someone with poor credit can be substantially higher than someone with good credit, making monthly payments higher and costing you more in interest.
One of the primary reasons people end up with a bad credit score is the misuse of credit cards. Making a single late payment on your credit card can affect your credit score faster than you might believe. Unfortunately, if you are forced to live from one paycheck to the next, you often have no other option than swiping a credit card when an emergency occurs.
Are there other options besides credit cards? More and more people are working to improve their credit scores by using alternative funding sources, and for individuals who own small businesses, one of the most popular emergency funding sources is a merchant cash advance. Here is a quick overview of how this emergency cash source could help improve your credit score:
Handle Emergencies Without a Credit Card
Credit cards are most often used because of the convenience they offer, especially when an unexpected cash emergency arises. When you are dealing with a time-sensitive matter, the last thing you want to worry about is where you will get the money you need to deal with the situation. With a merchant cash advance, you could completely avoid putting any more strain on your credit by maxing out another credit card.
Having another option other than the use of credit cards means you will have more time to make a strategic and calculated decision that is in the best interest of your business. This type of lending is based on your future success, not your credit score exclusively, which could provide you with cash amounts from $10,000 to $500,000 in as little as 24 hours, something a credit card simply cannot do.
Pay Off Any Outstanding Debt
If you are struggling with any outstanding debts, overdue bills and invoices or mounting fees and penalties, you can actually use this alternative funding solution to consolidate your outstanding balances into one simple sum. This means instead of your debts hurting your credit score while you work to pay them off, you can pay them down incrementally over several months with each credit card transaction. With a zero balance on your credit cards and an easy repayment option that is automatic, you are free to focus on the success of your business and rebuilding your credit score.
If you have more than one account you need to address, you could chip away at the balances over the course of several months or even years, trying to stay on top of the minimum payments and dodging late fees. Or you could take control of the situation and use the resources available to you to turn your credit score around. Juggling more than one credit card payment at a time can be rather challenging, but with easy access to the extra cash you need to pay off all your balances at once, it could dramatically improve your credit score.