Your business credit score is crucial to the overall health and success of your business. If you own a company and have any kind of open credit, then you will have a credit score. If you are looking to get financing then you may want to explore different ways to improve yours, so that you can get a way better deal. If you want to find out more about that then take a look below.
What is a Business Credit Score?
A business credit score is very similar to your personal credit score. Credit reporting agencies tend to use different methods to find out if you are credit-worthy or not. This includes the number of years that you have been in business for, your payment history, your outstanding balance and more. This number will usually range from 0 to 100, with 0 being bad and 100 being good. Some credit scores go up to 1000, so it’s important that you look into all the available options to keep track of your score in the best way. Credit scores are used to establish your eligibility for a line of credit, so carefully research the requirements to qualify for a business line of credit.
Why Should You Improve your Credit Score?
One of the main motivations to improve your credit score is how it influences your ability to secure financing for your business. If you have a higher credit score, then you can borrow more money. If you have a low credit score, then you may not be able to borrow any money at all. The good news is that if you do find that your credit score isn’t the best then you don’t have anything to worry about. In fact, there are numerous ways that you can improve your credit score. If you want to do that then here are some other options.
Check your Credit Score
It’s very easy for you to obtain your business credit score. The reports are not usually free, even if you are the business owner. Once you know your score and what you’re working with, it’s easy to get the other information you need to raise it. By checking your score, you can then find out if there are any accounts which might be negatively affecting your score.
Read more on checking your credit score for free
Pay your Bills on Time
Make sure that you are paying every single bill you have, on time. This might be a no-brainer but at the end of the day, it will really help you to improve your credit score. If you do not pay your bills on time, then the first thing that will suffer will be your credit score. All of the hard work that you have put in will be cancelled out by the fact that you are still a debt risk. This is the last thing that you need.
Decrease your Utilisation Ratio
One of the many things that credit reporting agencies look for when determining your credit score is the use ratio. That’s the percentage of your available credit that you’re using. It’s a good idea to try and keep this ratio well below 15%. If you are struggling right now, then there are a few ways that you can make this happen.
You can pay off your balances. If you can’t do that, just try and get them as low as you can. You can try to increase your credit limit. Ask your provider if they will do this for you. If you get approved then your utilisation rate will be much lower. If neither of these options is suitable then you can always take out a new line of credit. This may sound counter-intuitive, but having more credit options available and not actually using them will make you look good to a credit reporting agency. Pay your bills more than once a month as this will also really work in your favour. It means that your spending won’t pile up as much.
Establish a Credit Account
If you work with a supplier over and over again and you know that you have a very good payment record with them, then it’s worth trying to establish a credit account with them. When you do, you can then increase the amount of positive payments you have made, and this will really help your file.
Add Positive Payment Experiences
At the end of the day, not every vendor will share their payment data with a credit reporting agency. You can easily add trade references to your company credit and the more you can add here, the better.
Dispute Errors
It’s very possible for you to work with a credit card agency or even a credit reporting agency. When you do, you can then get any incorrect negative feedback removed from your file. It’s super important that you make sure the data on your company file is both accurate and up to date. If you have hard inquiries and even unpaid accounts then this will go against your report. If you do see something that shouldn’t be there it’s important that you dispute it with the company.
Of course, making sure that you get the best experience out of your credit report isn’t hard and if you follow the above tips then you will soon find that it is easier than ever for you to get the funding you need without having to worry about a thing. If you need to know anything else about taking out a loan, then it’s well worth consulting your loan provider as they should be able to help you with anything you need to know.
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