As a business owner, you’re most aware of the utility and importance of credit scores. Banks and lending companies will highly regard your business score as this partly reflects the financial stability of your business. It’s one determiner of your creditworthiness or simply your reliability to pay off debts in due time. Apart from your business credit score, your creditworthiness will incorporate outstanding balances, trade encounters, debt payments, and other relevant information. The higher your number, the greater your chances for borrowing or loaning more money with low interest rates. Lets find the effective ways to help you Boost Your Business’ Credit Score.
Strategies To Improve Your Business Credit Score
Considering your business will need additional funds for expansion and other operative costs, it’s essential to be aware of your credit score. This corresponding number is your key to procuring capital for your business and protect your personal savings if you encounter some issues.
Today, there are now more finance blogs such as Digital Honey that focus on helping business owners know how to navigate and maintain their business credit report. Apart from consuming online resources, in this article, you’ll learn more effective means to boost your business credit score.
1. Decrease Your Credit Use
Your credit utilization ratio is a major factor that’ll influence your overall credit score. This depicts the ratio of credit expended in relation to the amount of credit available.
While you may need to borrow money to cover certain business expenses, you have to be savvy enough to know when to use your credit card. If you used it too often than necessary, this can hurt your business credit score. This is especially true if you pay late and have other remaining balances from other vendors.
Apart from this, creditors might report your unpaid bills to collection agencies. You wouldn’t want to give up crucial properties or be charged with other penalties. If this occurs, this can potentially affect not only your credit score, but your company’s reputation as well. That said, it’s important to keep debt levels and credit utilization low. You can safely keep your ratio between 10–15%. To others, 30% is still safe.
If you’re trying to rebuild your business credit rating, you can also create a bank account that allows you to earn credit score while you save. Credit Strong Business and other similar community banks offer their customers this type of service. In this way, you can build your credit score from other legitimate means while strategically plan how to pay off balances, reduce credit card spending, and the like.
2. Pay Your Bills On Time
For you to boost your score, get ahead of credit card debt and stop paying late.
This one’s a no-brainer but might be difficult for some business owners. If you don’t have the financial capacity to pay on time, have a backup plan. This is to save you and your business from drowning in debts.
Keep in mind that most credit rating companies regularly collects data from vendors and suppliers to keep your score updated. Hence, if you always pay late, you’ll gain a high-risk score and dent your record. This will discourage and can create distrust from lending agencies and banks.
Furthermore, paying your bills on or before the deadline will have a great impact of your business credit score. This can also help you establish rapport and improve your relationship with creditors.
3. Check Your Credit Report
Obtain your business’ credit report and check if all the information and records are accurate and updated. This is a crucial step in helping you identify the factors that can help you raise your credit rating, remove previous unpaid information and other negative feedback, and more.
If you see disputable items such as payments that have already been made, it’s best to report this immediately to the credit reporting agency. They can reach out to this certain vendor to verify if you’ve actually paid the amount and their reasons for misreporting. Making sure that all details are true can help you boost your credit score and keep your records clean.
Also, if certain suppliers weren’t able to add payment references to your record, you can manually add this through the credit reporting company. Moreover, if you regularly pay off your loans and have a good relationship with certain vendors, ask if they could create positive reports to your file. You can also set up a credit account with them to raise your business credit score.
As a business owner, keeping your business credit card rating won’t only benefit you today; it could also affect the future and health of your business. By making it a habit to pay on time, decrease your utilization ratio, and have positive paying experiences, you can continue to financially support your company’s endeavors, projects, and other expenses.