A Complete Guide to Improving Your Business’s Credit Score

The credit score of your business is one major factor that determines its success. If you manage a company and have any kind of open-end credit, then you have a relative credit score. The primary motivation for trying to improve your business’s credit score is that it will increase your business’s chances of securing financing. Having a low business credit score can hinder you completely from financing your business. While having a less-than-perfect company credit report may seem like bad news, there are several ways to improve your business’s credit score. That’s why we have created this guide to improving your business credit score. 

Check Your Company’s Credit Report

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Thanks to several huge credit reporting agencies, you can quickly obtain your company’s credit report. While obtaining these reports isn’t free, it is still the first and most important step to take in rectifying your bad credit score. With a thorough knowledge of your business’s credit reports, you have every information needed to improve your credit score, including any debatable items in the report and the accounts negatively impacting your business’s credit score. 

Pay Your Bills on Time

This is one of the simplest ways of improving your company’s credit score. Repaying your debts promptly will help in demonstrating evidence of financial authority and responsibility, which will aid you in repairing your business credit score. However, if you fail to make payments in time, your company’s credit score will decline, making you a debt risk. Managing payments and still running a business can be quite overwhelming, so you may consider outsourcing this process to an accounting company like Geekbooks. If you are finding it difficult to make payments on time, you could contact your creditors and discuss more advantageous terms. 

Reduce Your Credit Utilization Rate

One important thing credit reporting companies always refer to when ascertaining your business’s credit score is the rate of credit utilized in comparison to the amount of available credit. Generally, it’s a great idea to ensure that ratio is kept under 15%. Here are some ways to make this happen: 

  • Pay your balances off: This is the most basic step you can take to reduce your debt ratio. If you’re unable to pay all of them off, at least ensure you pay off as many as possible. 
  • Improve your credit limit: Contact your credit card issuer and request that they expand your limit. This will decrease the ratio instantly. 
  • Make several payments a month: By doing this, your spending won’t have to pile up during the entire month, thereby keeping the ratio down. 
  • Create more lines of credit: By having available credit and not utilizing it, you appear more responsible to credit reporting companies. 

Dispute Any Inquiries or Errors

It’s possible to work alongside credit reporting agencies and credit card issuers to get unfavorable feedback taken out of your credit records. It’s imperative to ensure that every piece of information being reported about your business is up-to-date and accurate. Unpaid accounts and hard Inquiries impact your report negatively, so if you discover anything on your credit report that’s inaccurate, take time out to dispute it

Keep Your Personal and Business Funds Separate

Ensuring that your business and personal funds are kept separate is quite important to avoid an audit. By separating your personal and business funds, your record-keeping becomes less complex. It also makes budget analysis much easier. When you utilize your Social Security Number instead of your Employee Identification Number you are not only affecting one score, but also the other. A negative mark on your individual account will lower your company’s credit score and vice versa if they aren’t separated. The best way to ensure that these funds stay distinct is by having separate lines of credit and bank accounts. 

Include Positive Trade References to Your Credit Report 

Including positive trade references that your business has with vendors, suppliers, or business associates in your files will have a positive effect on your company’s credit score. While not all suppliers or vendors share payment information with credit reporting companies, you can still add payment experiences manually to your credit reports. 

While credit reporting agencies may refer to distinct sets of data to formulate an extrapolated credit score, making an organized effort to raise your general creditworthiness will help your rating with every major credit bureau. It’s always easier to sustain high credit scores than to repair low ones, so stay up-to-date on company reports and only borrow what you can repay. 

Steven Millstein

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