How Freight Factoring Can Improve Your Credit Score
Like most business owners, owner-operators need working capital to keep their business running - whether it's for fuel, truck maintenance or fleet growth. Unfortunately, cash is not always available, leaving loans or credit as the last option for payment on large purchases. Loans can be an excellent resource for growth for those with a high credit score, but for scores that need improvements, financing may be more of a challenge.
Finding lenders who agree to finance a borrower with a low credit score are often few and far in between, which is why we offer freight factoring as a solution. Freight factoring is a 24-hour cash payment alternative that does not require high credit and can rebuild scores over time. Read below for ways that freight factoring can improve your credit score:
1. Working Capital Access
Cash shortages lead to lower credit scores since it forces credit as the only alternative. Freight factoring increases cash flow, freeing up money for truck repairs, fleet additions and other necessary purchases.
2. Repaying Debt
Without freight factoring, owner-operators could wait for payment up to 30 days. These gaps between paydays mean credit is often a regular spending source. Consistent 24-hour payments provide reliable cash flow, allowing debt payments to be made on time or even in advance. Paying debts on time is an essential component of having a high credit score and cash makes this more manageable.
3. Rebuilding Credibility
To lenders, clients with late payments and excessive debt indicate lower chances of repayment. On-time payments and debt reductions done with freight factoring's cash flow lower the risk of the lender, increasing the likelihood of partnering with a business. Using loans provided by lenders can quickly grow fleets, and over time, the company.