How to Improve Your Business Credit Score

by | May 6, 2021 | Bad Credit Business Loans, Business Financing | 0 comments

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Did you know that a high business credit score will help you secure more financing for your small business? Note that business credit scores work almost like your personal credit score. This is because credit lenders will report various business loans as well as your repayment history to credit agencies, and these agencies will calculate your business credit score.

It is worth noting that business credit bureaus will rate your company’s creditworthiness on a scale from 0 to 100. Remember that when the time comes to push your small business forward and you need an infusion of cash flow, often your ability to secure a loan or line of credit is mainly based on having a good business credit score.

What is a Business Credit Score?

You should know that your business credit score is quite similar to your personal credit score. It is a number that represents your financial risk to lenders and potential creditors. Note that your business credit score is between 0 (the lowest) and 100 (the highest). And in most cases, a range of 65 to 100 is considered good. Also, it is worth mentioning that each kind of business credit score might work a little differently depending on who issues it. 

Tips to Improve Your Business Credit Score

As a good business credit score is important for securing business loans, you should keep it as high as possible. Remember that if your small business has accumulated a lot of debt or failed to repay loans on a timely basis, your business credit score may suffer.

However, you can improve your business credit score by following these simple tips.

Pay Bills on Time

It is no secret that building a reputation for timely and consistent repayment is crucial to improve your business credit score. Did you know that your late payments might hurt your business credit score more than your existing outstanding debt?

Paying your bills on time is one of the simplest and best methods of improving business credit. Note that this tip is perhaps the most important and also carries the most weight with many potential creditors and lenders when applying for a business loan.

You should always try to pay your bills on time, even if must stick to the minimum amount. You can also pay in advance if possible. It is vital to keep up this consistent and timely repayment behavior, making sure that your vendors report it to the relevant credit bureaus to improve your business credit score.

Monitor Your Score

There is no doubt that monitoring your business credit report regularly is important to maintaining and improving your credit score. This is why you should make it a routine practice to check in with all the credit bureaus every four to six weeks in order to look over the information used to generate your score, verifying that it is accurate and up-to-date.

If it is not, you should dispute any incorrect information to improve your business credit score. It is essential to address any mistakes and errors immediately with your creditors and continuously follow up until it is resolved.

Keep Credit Usage Low 

You may have noticed that your personal credit score often rewards you for not using 100 percent of the credit that you’ve access to. Note that this percentage is called the credit utilization rate, and it could affect your business credit score as well.

If you would like to improve your business credit score, try to keep your credit usage below 15 percent of your limit. You can easily do this by paying off balances as well as increasing your available credit.

Get a Bank Line of Credit or Business Credit Card

You can build a great business credit history and improve your credit score by using a business credit card for some expenses.

 However, make sure that you pay off the balance on a monthly basis. Similarly, you should build a good relationship with your local banker and then negotiate a line of credit for your business if you’re eligible.

Final Thoughts

Remember that business credit scores are not usually as uniform or simple as personal credit scores. This is why if your small business needs a loan, you must understand how your business credit score works and how you can improve it. You should know that having an excellent business credit score can have significant benefits for your business.

For example, you will likely get access to lower interest rates, have fewer borrowing restrictions, and reduce your personal liability. Also, if your lender uses a specific credit scoring model, you should focus on activities that will help you increase that model’s score.

About Small Business Funding

We are the one stop alternative financing funding source. Regardless if you have bad credit, short time in business, tax liens, judgments, or fast capital needs, we are your solution.

Our philosophy is why work harder when you can work smarter? That’s why Small Business Funding, through our network of financial partners, work with multiple providers on your behalf. Getting you the best rate and terms for your business.

Our network offers you access to quick and easy working capital to meet your individual business needs. We will put together a program to suit your business goals and financial situation, with ease. Why fill out 2, 4, even 6 applications when all you need to do is fill out one?

We recognize that small businesses are the driving force to grow our economy. In good times, as well as the challenging times, business owners need a fast cash flow solution.  Whether you use it for payroll, purchase new equipment, expand inventory, pay taxes, etc. Fact is, it doesn’t matter what you use the funds for, as long as it helps grow your business and increase your revenue!

If your company was turned down by traditional lending sources, such as banks and other commercial lending institutions, Small Business Funding can help.

Join our family – we look forward to serving you. Apply today