Six Tips to Raise Your Business Credit Score

A high business credit score will allow you to secure more financing for your business. Business credit scoring works almost like personal credit scoring—credit lenders will report business loans and repayment history to credit agencies, who will then calculate a business credit score.

Because a good business credit score is essential for securing business loans, it is important to keep it as high as possible. If your business has accumulated too much debt and failed to repay some loans on time, your credit score may have suffered. However, it is still possible to improve your score by following six simple tips.

Check Your Credit Report

Having a clear understanding of your credit history is the first step towards building a healthy credit profile. You can talk with a credit reporting agency to assess your credit score—some, like Equifax Small Businessoffer consulting services to help you manage your business credit profile.

Once you get your report, you will know where you stand and what you have to work with. Credit reports will also show you which accounts harm your credit score the most; these will be your first targets. Make a list of all the high interest loans that you had trouble paying off and prioritize which accounts to focus on first.

Pay Your Bills On Time

Building up a reputation for consistent and timely repayment is essential to improve your business credit score. Your late payments may hurt your credit score more than your current outstanding debt.

You should always strive to pay all your bills on time, even if you have to stick to the minimum amount. If possible, pay in advance. Keep up this consistent repayment behavior and make sure that vendors report it to the credit bureaus to raise your score.

Don’t Close Your Accounts

Although it is important to reduce your overall debt, closing all of your accounts will not improve your credit score. Do not only think about the money you owe, but also consider the money you could borrow. This is where credit utilization comes into play, which is a way of measuring how much debt you have versus how much credit you could take on.

For example, if you apply for a business credit card account, your available credit will increase, thus reducing your credit utilization. Moreover, you can use a balance transfer credit card to move debt from a high-interest credit card and pay off the loan at zero percent interest.

If you have credit accounts that you don’t use anymore, do not close them. Having a relationship with several lenders will give you access to more financing sources.

Try to capitalize on your good relationship with lenders and repay high-interest loans that you’ve had for a while. In fact, credit reporting agencies will rank you higher for having long-term accounts with several lenders.

No Credit Equals Bad Credit

If you do not have any credit, you cannot have a credit history. Lenders and financial institutions want to see your history of paying off loans to give you more loans. If you have no history of this, they don’t know if you’ll be a good financial candidate. If you have no credit history, start with taking out and repaying small loans.

Build on Your Positive History

 Lenders are more likely to report a bad experience to credit bureaus than a good one. If you have been a loyal bank customer, ask them to report on the positive experiences. The more lenders assess your creditworthiness, the better your business credit score will get.

If you have failed to repay some lenders on time, do that as soon as possible. In fact, negotiate with them, and, if possible, offer to repay the debt in full in exchange for withdrawing any information about late payments that they have provided to credit bureaus.

If the positive experiences outnumber the negative ones, even at high debt levels, your business credit score will improve.

Keep Your Personal Finances Separated

Your low personal credit score may have an impact on your ability to find financing for your business. One way to prevent your personal credit score from lowering your business credit score is to keep your accounts separated. Do not make personal purchases on a business card, and then write them off as a business expense. Your company’s bank account should be completely independent of your personal one.

If your business is going through some rough times, do not be afraid to take out a small business loan. Of course, the final goal should be to grow your business, so choosing the right option is important. Get your credit score report, identify the worst “offenders,” prioritize, create an action plan and start working on removing those black spots from your credit history. By being consistent, you will be able to bring your business credit score to “excellent.” It’s always worthwhile to consider hiring a professional to help you improve your business score. Talk to a representative from CreditRepair.com to discuss your options.

Guest Post: About the Author

Renata Ilitsky is a writer and editor for CreditCardsReviews.com. She is a freelance content writer with over 10 years of experience. She specializes in creating unique and engaging content for any industry. To read some of Renata’s other work, please view her writing portfolio.

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