You’ll find there are parallels between your personal and credit business scores. While the range for your personal score is 300-850, your business credit score will fall somewhere between zero and 100. It is calculated by a trio of credit agencies, including: Dun & Bradstreet, Experian and Equifax. Of course, the higher your score, the better your chances of getting approved for a business loan. This Union Commercial Capital blog posts shares a few tips on how to improve your business credit score.
1) Payment History
Pay your bills on time. It sounds simple enough, but when cash flow is tight, it can be easier said than done. Your payment history carries a lot of weight in your credit score. Paying your bills on time is a surefire way to create a positive payment history for your business credit score. Remember this when you are juggling income and expenses.
The good news is that when it comes to your credit, partial payments go a long way. So even if you can’t pay back the entire amount due, pay your creditors. Whether it’s a supplier or a vendor, something is better than nothing for your business credit score.
2) Understand Your Business Credit Score
When it comes to your business credit score, what you don’t know can hurt you. That’s why you’ll want to check your business credit report on a regular basis. Make sure that all of the information is current, and look out for any mistakes. Even if your business has a unique name, it’s not unheard of for the credit bureaus to confuse business names. This would result in incorrect information making its way to your file.
Furthermore, you also want to keep an eye out for possible fraudulent activity on your report. Telltale signs could be unauthorized credit inquiries or loan applications, for instance. If you find this, contact the credit bureau as soon as possible so that you can have the information removed.
3) Credit Usage
Have you noticed that your personal credit score rewards you for not using 100% of the credit that you have access to? This percentage is known as a credit utilization rate, this number could move your business credit score too. This is dependent on how much of your available credit you’re accessing and is a percentage of how much credit you’re using versus how total credit you can access. To improve your business credit report, try and keep your credit use below 15% of your limit. You can do this through a combination of paying off balances and increasing your available credit.
4) Share Supplier and Vendor Payment History
You can do whatever it takes to pay your suppliers and vendors each week, or whatever payment schedule you’re on. If they are not sharing your payment history with the credit bureaus, ask them to do so. Focus on the vendors and suppliers with whom you have a solid relationship and a positive payment history.
In Conclusion
As you work to improve your business credit score, keep in mind that your credit profile goes beyond this number. Lenders are looking at the big picture to ensure that you’re a good credit risk and are likely to repay your loan. You should be maximizing the positives, such as supplier payment history, and working to reduce any flaws, such as a blip in payments or too much leverage vs. income. If all of these bases are covered, chances are you will find yourself on the receiving end of financing sooner than later.
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