Many owner-operators, and Americans across the country, took on substantial debt during the recession. While many are still working to climb out of it, factors such as slow freight, switching carriers, increasing fuel costs or family emergencies can slow this process. For owner-operators, debt doesn’t just affect your personal life; it can also affect your business.
Debt resulting in a bad credit rating can make it difficult to get a truck loan. This is a big deal since your truck is one of the most valuable parts of your business. Lenders’ access to data from the CSA gives owner-operators more reason to boost credit scores as much as possible. Access to CSA data has made an impact on the ability of small operators to get loans. Banks and lenders view that data, and if they think they’re not safe, they won’t give loans. However, decreasing debt and improving your credit rating can be easier than you think by following the tips below:
- Take advantage of regular bill payments. A fuel card account, for example, can improve your credit. Take your fuel data to a bank and show them. It establishes an impressive pattern of on-time payments.
- Run at least 2,500 miles per week. This starts by communicating your need for more mileage to your dispatcher. Do this early in the week.
- Cut food costs in half. Add a microwave in your cab and stock a refrigerator or cooler with food. Use store coupons when you can. Your per diem is 80% of $59/day and you get to claim this amount whether you spend $10/per day or the full amount.
- Use your smartphone to process paperwork. Instead of paying for truck stop scanners, use your smartphone to accomplish these tasks for you. An app like Camscanner can file your documents and send them to your business service provider.
- Watch your credit card balances. How much revolving credit you have versus how much you're actually using is a huge factor to your credit rating. The smaller that percentage is, the better it is for your credit rating. The optimum is 10 percent or lower. Boost that score by paying down your balances.
- Eliminate nuisance balances. Small balances on a number of credit cards can hurt your rating. Gather up all the credit cards on which you have small balances and pay them off. Then select one or two go-to cards you can use for everything.
- Don't slight bills in favor of a down payment. If you're planning a big purchase (like a home or a truck), you might be scrambling to assemble one big chunk of cash. While you're juggling bills, don't start sending bills late. Even if you're sitting on a pile of savings, a drop in your score could scuttle that dream deal. Saving money for a big purchase is smart. Just don't slight the regular bills, or pay them late, to do it.
- Avoid cash advances. Cash advances indicate current or future money stress and will negatively affect your credit rating.
Repairing bad credit is a bit like losing weight; it takes time and there is no quick way to fix a credit score. But if you follow these tips to decrease your debt and boost your credit rating, you will be on the road to financial recovery.