How to build business credit and improve your poor score
Last month, we shared a few strategies on how businesses can receive additional working capital with poor credit. Although some lenders will be lenient about your credit score, don’t you want to improve it anyways? In this post, we’re going to offer some credit score tips, so that you can work on raising that credit score!
As a small business owner, it is necessary that you’re aware of your credit score. If your score is less than desired, it might be time to focus on how you can build business credit. This will be beneficial for the long-term future of your small business, and you’ll be able to focus on other initiatives!
1. Pay your bills on time – Get into the habit of paying your business’s bills on time. This will help raise your business’s credit score, and ensure that you won’t rack up debt. You should strive to pay all of your bills by their due date, but this is especially important for auto, health, mortgage and credit card statements. Missing your bills’ payment due dates can wreak havoc on your credit score, so make sure to always aim to pay your bills on time!
2. Consistently check small business credit reports – On a regular basis, you should check the status of your business’s credit score. This way, if there is a mistake, you’ll be able to investigate it. Reviewing small business credit reports periodically will allow you to confirm that there are no mistakes in your report. In addition, if a recent report has shown an increase or decrease in your credit score, you’ll be well-aware.
3. Pay off debt – Having outstanding debt can take a toll on a business’s credit score. In order to build business credit, you should aim to pay off any existing debt. Although paying off your debt doesn’t mean that your credit score will immediately increase, it will show that you are a reliable borrower that follows through on debt repayment. If you’ve acquired major debt, this can be detrimental to your credit score, so make paying off your debt a priority!
4. Limit opening new accounts (and closing old ones) – Unless absolutely necessary, limit opening any additional bank accounts. If your credit score is already below average, this could negatively influence your score. Concentrate on how you can build business credit, and open up another account once you’re in better financial standing. In addition, depending on your situation, closing accounts can also potentially affect your credit score. Only close accounts if there is fraudulent activity, or if you have an excessive amount of accounts.
With these credit score tips, you’ll be able to make progress on improving your business’s credit score. Although this can be a challenge, adapting these financial standards will help you run an overall better business. Did you successfully raise your business’s credit score? Share your insight with us in the comment section below!