Every single business owner needs to know its business credit score because it is vital for the company’s success and health. Whenever there is an open credit line of any kind, the credit score surely exists.
The business credit score is very similar to a regular personal credit score. Creditworthiness is calculated by agencies and lenders use this to determine if they offer a loan or not. Fortunately, when your business credit score is low, there are services like LetMeBank that help you to get a good loan. However, improving a business credit score is a necessity and should be seen as a priority.
Check Business Credit Report First
The credit report for your business is available from all the major reporting companies, like Experian, Equifax, and Dun & Bradstreet. The reports are not free but you need to check them because you have to check if records are correct.
After you know exactly what the business score is, you know how much the score needs to be raised. The simplest ways to get this done are the following.
Pay Bills On Time
This is by far the easiest possible way to improve business credit score. Whenever bills are paid with delays, credit scores suffer. When you pay everything on time, the score is improved since you are no longer listed as being a debt risk.
Decrease The Use Of Credit
Credit reporting agencies analyze many things when they calculate credit scores. One of them is how much credit is used when compared to how much is available. Usually, this ratio should be kept under 15 percent. This can be done in various ways, like:
- Paying off balances – This instantly decreases ratios. When you cannot entirely pay off balances, at least get these as low as possible.
- Decrease credit card use – Reduce how much money is spent on your credit.
- Increase credit limit – Ask the provider to increase the credit limit. This instantly decreases ratios.
- Pay bills more often – Ratio is kept down because spending does not pile up over the month.
- Open credit lines – Although this is counterintuitive, you get more credit that is available for the business so the ratio becomes lower.
Create Credit Accounts With Your Suppliers
When you have a business relationship with some suppliers and payments are always made on time, talk to them in order to establish credit accounts. This increases how many positive payments are listed on your file. As an immediate result, the business credit score is improved.
Add As Many Positive Payment Experiences As Possible
Your credit file includes positive and negative payment experiences. While not all suppliers and vendors share payment information with the reporting agencies, trade references can be added by you to the credit file of the company. This is possible through manual filing done directly to the reporting agency. When you have many positive payment experiences inside the file, your business credit score becomes higher.
Dispute All Errors
One thing that many business owners do not know is that you can work with the credit reporting agencies and credit card companies in order to remove some negative feedback from the credit file. Simply put, whenever you notice something that is not accurate or up-to-date, you can point it out.
Remember that unpaid accounts and hard inquiries will negatively affect the report. This is why whenever you see something that should not be listed, you can need to dispute it. Such a move instantly improves the business credit score.
Obviously, the only way to dispute errors is to offer proof that the record is inaccurate. You do this by keeping track of absolutely every single business expense.