Your company’s credit rating is a key measure of its financial stability. Though improving your company’s credit may seem like a daunting task at first, it’s really a crucial long-term investment.
Through help company owners understand the value of a strong business credit score, we’ve covered everything from credit establishment to credit restoration.
Why is company credit important?
Strong company credit is a powerful tool for business owners. Business credit ratings reflect creditworthiness based on debt, payments, and history. Your score shows lenders, merchants, and credit card issuers how well you pay invoices and debts on schedule.
A higher business credit score increases your chances of getting short term small business loans. Consider cheaper rates, greater credit lines, or longer payback periods. A good business score may also help you negotiate insurance prices and landlord and supplier payment conditions.
Credit score improvement for businesses
Certain measures may boost your company’s credit score, but none are infallible. These five methods may boost your company credit score:
- Update your company credit bureau information.
Dun & Bradstreet, Equifax, and Experian are the primary commercial credit agencies that collect and score business credit. Business credit scores are calculated differently by all three agencies, because lenders and suppliers send credit information to various bureaus. So update your credit file with all three bureaus instead of just one.
Go to each credit bureau’s website and read their business credit rules. You may then evaluate your paperwork, submit financial statements, or verify your company credit report for problems. Report problems to the credit bureau promptly. Improving your score requires a clean, accurate, and up-to-date credit file.
2. Pay bills on time.
Paying lenders, merchants, utility providers, and landlords on time is one of the simplest methods to improve your credit score.You may have to adjust your cash flow to meet the due dates, but even a few days early may boost your credit score.
3. Keep credit use low.
A credit usage ratio compares your utilized credit to your available credit. Credit reporting companies like lower credit usage percentages since they indicate you’re not maxing out your credit.
A fair ratio is 30%, while a great one is 10%. Say your company line of credit is $20,000. A 30% credit usage ratio requires using no more than $6,000 before paying off your bill.
4. Create business credit card
Keeping your spending and monthly payments on track with a second or third company credit card will boost your score.
Get a company credit card that reports to one of the three main commercial credit agencies. Find out whether your credit card issuer submits your information to a credit bureau by checking their website FAQs or calling customer service.
Plan your new business credit card usage once you obtain it. Designate your card for office supplies or delivery vehicle gasoline. You can conveniently manage your monthly spending and make frequent payments to keep your balance low.
5. Include trade references on your credit report.
A lot of credit bureaus employ trade references to check your vendor and supplier payments. Trade references depend on payment method, quantity owed, and past-due amount. Positive trade references improve corporate credit.
If you purchase business supplies from many suppliers, ask them to record your payments to a business credit agency. Your trade references should be excellent if you follow your trade agreement, such as paying within 30 or 60 days after getting your items.
You may include suppliers as trade references on credit bureau accounts even if they don’t report. Credit bureaus will contact you for payment information after you report.