Boosting Your Business Credit Score: 3 Ways to Do It
Did you know that your company has its own credit score? Much like you start life with no credit, good or bad, so does your business. To receive the best interest rates and credit limits as you build your business, you need to ensure you have a good business credit score. Check out these tips to raise your score and create a better business.
Pay Your Bills Right Away
The easiest way to build your company’s credit is to pay its bills as soon as you receive them. When you pay them even a few days late, it creates a pattern that potential lenders can see, and they’ll likely view you as a risk. The longer you wait to pay the bills, the more of a risk you become. If you aren’t paying them as soon as you receive them, anything else you do to try to improve the score won’t matter. If you are someone who often opens mail or looks at emailed bills and then forgets about them, it is a good idea to set up automatic payments. This way, you won’t lower your credit score simply because you’re forgetful.
Decrease the Ratio of Credit You Have to Credit You Spend
An important part of business credit is using it, but not using it too much. Typically, a lender wants to see that you use 15 percent your available credit limit or less. You can lower the ratio by paying off any balances, increasing limits but decreasing how much you use the credit cards, opening new lines of credit and paying the bill more often than once per month. Remember, the more credit your business has and isn’t using, the more you look like a responsible borrower who will pay back loans on time.
Check Your Credit Report Regularly
You probably already know that you need to check your personal credit report often, but you need to do the same for your business. You can obtain your company’s credit report from Experian, Equifax or Dun & Bradstreet. Read it carefully. Learn your score and decide which ways will best improve it. In addition, you can manually add positive credit experiences to your report of the vendors and suppliers don’t do it themselves. Pay attention to any negative marks as well. Dispute anything that is incorrect and ensure that agencies delete any negative marks after you’ve paid them off.
Even if you have bad business credit, don’t just stick your head in the sand; doing so could mean the difference between a successful company and one that goes under due to lack of financing. If you aren’t sure how to fix your score alone, consider contacting a reputable professional for help.