7 Tips for Improving Your Business Credit Score
Here are 7 Tips for Improving Your Business Credit Score:
1) Know Your Business Credit Score and Where You Stand
The first step to improving your business credit score understands what it is and where you currently stand. Your business credit score is like your personal credit score, but for businesses. It’s a three-digit number that lenders use to assess your risk as a borrower, and it can range from 300 to 850 points.
If you don’t know your business credit score, you can check it for free on Nav.com. Simply create an account and receive your business credit report and score, updated monthly.
2) Review Your Business Credit Report for Accuracy
Once you know your business credit score, take a look at your business credit report to see what factors are impacting your score. This report is similar to your personal credit report in that it lists your current and past credit history, including trade lines, payment history, and public records.
If you find any errors on your report, dispute them immediately. Any inaccuracies could be dragging down your score unnecessarily.
3) Pay Your Bills on Time, Every Time
One of the biggest factors impacting your business credit score is payment history. Lenders want to see that you have a history of paying your bills on time, so it’s important to make sure all of your accounts are up to date.
If you’re behind on any payments, bring them current as soon as possible. You should also set up automatic payments for all of your recurring bills to ensure you never miss a payment again.
4) Keep Your Credit Utilization Rate Low
Your credit utilization rate is the amount of available credit you’re using at any given time. For example, if you have a credit card with a $10,000 limit and you’re carrying a balance of $5,000; your credit utilization rate would be 50%.
Lenders prefer to see a low credit utilization rate because it means you’re not maxing out your credit lines and racking up debt. Aim to keep your credit utilization rate below 30% to avoid damaging your business credit score.
5) Open a Business Credit Card
If you don’t already have one, open a business credit card in your company’s name. This will help you build a separate credit history for your business, which is essential for improving your business credit score.
When choosing a business credit card, look for one with rewards or perks that will benefit your business, such as cash back on office supplies or travel. And be sure to use the card responsibly by paying off your balance in full each month and never missing a payment.
6) Get Trade Lines in Your Company’s Name
Another way to build your business credit history is by getting trade lines in your company’s name. Trade lines are essentially lines of credit extended to businesses by suppliers or vendors.
To get started, simply reach out to your regular suppliers and ask if they offer trade lines. If so, have them report the account to the major business credit bureaus (Experian, Dun & Bradstreet, and Equifax) so it will appear on your business credit report.
7) Become an Authorized User on another Business’s Credit Card
If you can’t get a trade line in your company’s name just yet, another option is to become an authorized user on another business’s credit card. This means you’ll be able to use the credit card for your business expenses, but the account will appear on the other business’s credit report.
To become an authorized user, simply contact another business owner and ask if they would be willing to add you to their account. Be sure to choose a business with good credit so you can benefit from their positive payment history.
Conclusion:
By following the tips above, you can improve your business credit score and get on the path to securing the financing you need for your business. Just remember to be patient – it takes time to build good business credit. But if you’re diligent about making payments on time and maintaining a low credit utilization rate, you’ll eventually see your score start to rise.
Improving your business credit score is essential if you want to get approved for loans and other forms of financing. By following the tips above, you can start building a strong business credit history that will help you get the funding you need to grow your business.