Credit scores are a part of not just your personal life but your business life as well. The better your credit score, the more opportunities your business will have. It’s undeniable that a good business credit score is vital to your success.
Not sure how to improve your business credit score? It’s easy! Just follow these four steps.
1. Make Payments on Time
Good credit means more favorable terms on business loans and fewer headaches when applying for loans. The easiest way to improve your business credit score is to pay all of your bills on time. Missing a single payment could cause your scores to plummet.
Ensure you know the due date for every single bill and make sure those bills are paid on time or early. Keep in mind that if you’re trying to improve your score the first thing you need to do is start paying all of your bills on time.
Otherwise, your other attempts to improve your credit won’t get you very far.
Maintain Low Credit Card Balances
Another important aspect of a healthy business credit score is a low credit utilization ratio. In other words, you want to keep your credit card balances as low as possible. Aim for a ratio that’s under 15 percent if you’re looking to quickly improve your score.
To maintain a low credit utilization ratio you’ll need to pay off your balances every month (or at least as low as possible) and lower your credit card spending. You could also ask for a credit line increase to immediately see a reduction in your credit utilization.
Establish Supplier Trade Lines
If you have a good relationship with your suppliers, ask them to extend a trade credit to you, where you can pay in increments after you get your inventory. The important part of this is that they report to the credit bureaus so your on-time payments will be reflected in your credit score.
This is also helpful in establishing more trade lines. With at least three trade lines you’ll get a Dun & Bradstreet Paydex score which is a measurement of your businesses payment history.
Constantly Monitor Your Business Credit Report
Like your personal credit report, you want to make sure your business credit report is free of errors and up to date. Mistakes do happen, and when they happen to your credit report that can cost you big in the long run.
Before you apply for financing, get a copy of your business credit report and scour it for errors. If you see any mistakes, dispute them with the credit reporting agencies (Equifax, Experian, TransUnion, and Dun & Bradstreet).
This could be a simple fix to seeing a major increase in our business credit score.
Maintaining Your Business Credit Score
Your business credit score is similar to improving your personal credit score. Paying your bills on time, keeping credit utilization low and ensuring there are no errors on your business credit report are all ways to improve credit and maintain a healthy score and to a successful business.
Contact us today and learn how we can help your business grow.