10 Ways to Improve Your Business Credit Score

in Business on 20th May 2020

A good business credit score acts as a trust factor for your business to get some loans or credits from lenders. Maintaining a better credit score will guide other vendors, energy lenders, and business partners about how successful you are in terms of paying your debts. Hence, a great credit score is all you want when you are planning to expand and grow your business with the help of loans. The higher your score is the better chances for your loan to get approved. No lender wants to take a risk by lending someone who is incapable of paying back or someone who has a bad credit history, right? So, it is high time you improve your business credit score and enjoy benefits out of it. And there are plenty of ways to foster your credit ratings. You will learn the easy yet effective ways to improve your business credit score in this article.

While improving the credit score has become a crucial task for small & medium businesses, most startups are aware that businesses have credit scores. So, there is a huge need to learn what a business credit score is and how it helps in growing your business.

Why and how does Business Credit Score help businesses?

A business credit score is a number that indicates if your business or company is eligible to receive a loan or not. This ranges from 0 to 100 where o is poor score and 100 is an excellent score. The closer you are to 100, the better. Having an average or good credit score helps your business in many ways.

The top credit bureaus measure your ability to repay business loans based on various factors such as payment history, credit usage, and your net worth. Hence you need to have a clear and progressive graph on these three factors in order to achieve a good score. Not just you become eligible to access the loan, expand your business, and gain some trust, there are other benefits too.

  • You can get loans of bulk amounts for expanding your company or buy some equipment. The higher your credit score the more energy you will receive with the fixed interest rates. Most of the startups with lower credit scores are paying huge interests for their loans as they are unaware of the importance of business credit scores.
  • Your personal credit score doesn’t get affected if you manage your business with business credit. In case your business credit is bad, your personal credit score remains unaffected.
  • You need not risk your valuables and personal assets when there is a delay or when you fail in clearing your business debts. You can risk only the infrastructure of your business and hence your personal life doesn’t get affected much, though it is stressful.

10 Ways to Boost your Business Credit Score

Check your Business Credit Score Regularly

Your business credit reports are accessible to everyone, and the lenders whom you have contacted for loan access your credit report to decide whether to lend you or not based on your credit score and payment history. While everybody can look at your credit, why not check your own credit report? Signup for credit bureaus and get your report, there are many agencies like Dun & Bradstreet, Experian and Equifax which provide you with credit reports.

You need to check your credit report regularly, mostly for 6 months in order to stay aware of your credit score.

Audit your Credit Report

After you access your credit report, run a thorough audit on the report. Check if there are any disputes which should not be there. Notice the negatives in the reports so that you can rectify them.

Clear Bills on Time or Early if Possible

Repaying or clearing the debts is one of the best ways to keep your credit score to maximum. This alone contributes to raising your score as all the lenders look for the businesses which can repay them in a timely manner. 

Reduce Credit Utilization Ratio

The credit utilization ratio is the ratio of credit used to the credit available. The lower your credit utilization ratio the better as it indicates that you are paying off the debts more often. So how do you lower the credit utilization ratio? Here are a few simple tips.

  • Pay your bills twice or even more in a month to increase the credit available. Thus you can keep the ratio lower.
  • Request your credit card provider to raise the usage limit.
  • Clear all your debts or the maximum to decrease the ratio.
  • Limit your spending, to lower the ratio.

Do Not Carry too Many Debts

No lender wants to offer a loan for a business that is having too many debts already. Too many debts might indicate the failure of the business in the future from a lender’s perspective. So, clear your existing debts first and then apply for a new loan. Also, the uncleared debts impact badly on the credit score as the payment history appears poor.

Add Credit Accounts with your Frequent Suppliers

Establishing credit accounts with the suppliers you frequently deal with is an amazing opportunity to improve your credit score. This shows that you clear the debts more often and hence a clear payment history is created which is a positive report.

Include your Positive Payment Experiences

If you are a new business and do not have much rapport with your suppliers to ask for establishing a credit account with them, then just include them in your references. Your lenders may reach them to confirm your trustability and you will be winning anyways if you have really paid them well in a timely manner.

Make Sure there are No Negative Reports

Get the help of credit bureaus and clear all your negative records. As each factor impacts your credit score you must ensure if your business credit report has all positive feedbacks. There are some credit agencies that clear your negative credit history if you have cleared all the debts already.

Pay for Delete with Collections

The negative reports may not be removed after your debts go to collections even after you pay. So stay cautious and make sure you ask the credit reporting agency to delete the negative reports. As negative reports impact your credit score badly, you need to check this twice and protect your credit score.

Get Notified about Negative Reports

Have an active account in any of the credit reporting agencies to stay alert about the changes happening to your credit report and score. Enable notifications to stay updated on the latest changes in your credit report so that you can take action immediately if there are any negative reports.

Conclusion

Improving the business credit score is not that difficult as you imagine. The only measure you need to take is paying the bills before the time. Having a good business credit score will help you save some money by avoiding high and flexible interest rates. Hence you can completely focus on growing your business to new heights while you have lenders who are ready to owe you lumps of amounts by your side.

Categories: Business

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