When you need to improve your business credit score, it is best to understand what is the difference between your business and personal credit score. This is because most lenders will review both of them, and others favor one. Since it is the business credit score you want to improve, you need to know where your score is at as it represents the strength of your business as you seek a loan.
Also, calculate your business credit score by looking at your payment history with suppliers, lenders, and vendors, and the higher the score, the better. Firstly, get to know your current business credit, and through this, you can find or try to reach companies that help build business credit to improve it. In this article, are other ways that will help to improve your business credit score.
How to improve your business credit score
Pay all bills on time
This is an easy way to improve your business credit score, but most business owners take it for granted. So if you were not paying your bills on time, start paying them on time, and you will notice your score improve. No matter how busy you get with your everyday business duties, be careful not to let your bookkeeping tasks fall through the cracks. Have a good system in place and be diligent in following through with the timelines. Late payments will affect your score negatively. Therefore, pay at least once a month or frequent payments where possible.
Report any wrong information
Some business owners do not know their credit score, and because of this, they are not aware when there is wrong information in their profile. Hence, you must start reviewing the reports of your business credit score, in case there is any inaccurate score. Plus, wrong information will hurt your overall credit score and affect your chances of working with many lenders.
In case you find anything on your report that is not accurate, for instance, an unpaid debt that you did pay for, contact your credit report agency to dispute it. Do this to improve your score as it is a critical step.
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Pay attention to your credit utilization ratio
The credit utilization ratio is one of the things that credit reporting agencies look at when they assign your scores. Hence you should balance your credit utilization ratio. Measure this ratio with the amount of credit available to the amount of credit used.
Thus, it is best to keep your ratio under 30%. As when you have a lot of debt, it will show that your business is struggling to clear its bills. Thus, to get a good ratio, pay your balances, open another account, or ask your lender to increase your limit.
Request vendors to report payments
When you get into the habit of reviewing your score, you may find that suppliers or vendors are missing. Plus, since it is not a requirement, not all lenders report the credit history. Therefore, where you have accounts with suppliers and vendors, and you have a good payment history with them. Request them to make reports on the same with the business credit bureau.
In this way, it will help to boost your business credit score. Plus, where the vendor does not report the payments, you can choose to open accounts with vendors that will. Through this, the more positive reports that you get from suppliers or vendors, they will help to better your business credit rating.
Open a new account
If you are a business owner and you do not have a lot of accounts in your business name. Open two or three, for instance, a business credit card or a business loan. Since when you have no credit, it has no much difference in having bad credit. This is because the lenders do not have a history to review as they decide if they approve your loan request or not. Also, ensure that all the money you borrow, you repay it.
Importantly, choose lenders that will not allow you to borrow more money than you can payback. When you have credit that you are not using is a plus to credit reporting agencies.
The goal of our discussion was to let you know about how to improve your business credit score. We hope it will help you. If you have any further queries, please let us know in the comments section.