5 Steps to Improve Your Business Credit Score

Having a strong understanding of your business credit score (and how it works) is crucial to understanding your financing options. Your credit score not only reflects the financial health of your business, but it can also give you access to more favorable loan rates and other types of financing. However, if your credit score is low, it can be difficult to get the funds you need to grow your business in the most stress-free, efficient way possible. So, what can you do? Here are five ways to improve your business credit score fast.

Check Your Credit Report 

The first step in improving your credit score is understanding where it currently stands. That’s why it’s important to check your credit report before you apply for a loan so that you know exactly what lenders see when they evaluate your business’s financial history. Make sure that all the information on your report is accurate, and if there are any errors or discrepancies, dispute them with the appropriate credit bureau as soon as possible to avoid potentially long-lasting negative impacts. 

Pay Bills On Time 

One of the most important factors impacting your credit score is whether or not you pay your bills on time. Late payments result in late fees and negative marks on your credit report that can quickly drag down even a good score. Set up automatic payments to your vendors or suppliers wherever possible so that you don’t have to worry about forgetting due dates or running out of time to make a payment before the deadline passes.  

Separate Personal and Business Credit 

It’s important to make sure that personal and business expenses remain separate from one another whenever possible. This means using a separate bank account for each activity and obtaining different lines of credit for both as well. This will ensure that your personal finances won’t be affected by any issues with your business accounts, and vice versa—plus, lenders will be able to get an accurate picture of both entities when evaluating them for financing opportunities or loans. 

Increase Your Credit Utilization Ratio 

Your utilization ratio measures how much debt you have relative to the amount of available credit available—in other words, how much debt are you carrying compared to how much more debt you could theoretically take on? A low utilization ratio sends a positive signal to potential lenders because it shows that you aren’t overextending yourself financially; aim for keeping this ratio below 30%.  

Establish Credit Lines With Suppliers/Vendors

The last step in improving your business credit score is establishing relationships with suppliers/vendors who offer longer-term payment plans than typical invoicing cycles allow (which usually range from net 10-30 days). Doing this can help boost their trust in you since they know they will get paid eventually if they extend terms beyond their usual policy; plus, as long as these extended terms are reported back to the major consumer reporting agencies (Equifax, Experian, etc.), then it should reflect positively on your overall report card too! 

Improving your business’s credit score doesn’t have to be an overwhelming task—all it takes is some strategic planning and dedication. By checking your current rating regularly, paying bills on time, separating personal from business spending/credit lines, decreasing utilization ratios, and establishing relationships with vendors/suppliers who offer extended terms beyond traditional invoicing cycles — all these steps will go a long way towards helping increase yours! With these five tips in mind, you can move score into healthier territory in no time at all — opening up access to better loan rates and financing options. Don’t let a bad credit score stand in your way.