Managing Your Business Credit Score

Author : Eddie Dave | Published On : 24 Mar 2021

For businesses, a healthy financial profile means access to lending, higher loan limits, and better rates from suppliers. This means that a good business credit score is an invaluable asset for any business. However, since credit scores are not permanent, the nature of your transactions can cause your credit score to slip leaving you with a bad business credit report.

Fortunately, a poor credit report can be changed. This is one of the reasons why businesses need to monitor their company credit scores frequently. Once you know what your credit score is, you can take steps to improve it.

Ways to Improve Your Business Credit Score

Check your business credit report regularly

The only way to ensure that the financial data used to score your business is accurate is to monitor your credit report frequently. This way you can ensure that the financial data is up-to-date and accurate.

Once you have your credit report you can access information on which accounts are negatively affecting your credit score and any inaccurate or outdated information on the report.

Pay creditors on time

Defaulting on bills, loans, and other payments has a significant impact on your credit score. Paying your bills on time is one of the easiest ways to get your credit score back up. Meeting your financial obligations is an indicator that you are not a debtrisk and this helps to boost yourcredit score.

Monitoryour credit utilization ratio

Your credit utilization ratio is determined by the percentage of credit used compared to the total credit available. To improve your credit score it is important to keep your credit utilization ratio below 15%.

If your credit utilization ratio is higher than 15% you can work on bringing it down in any of the following ways:

  • Increase your credit limit

If you ask your lender to increase your credit limit this automatically decreases your credit utilization ratio.

  • Pay off your outstanding balances

Paying off some of your balances will also bring down your utilization ratio. Work on making full or partial payments on your balances if you want to improve your credit score.

  • Get a new line of credit

The more credit that you have that you are not usingthe lower your utilization ratio will be. Opening a new line of credit and not using it can improve your credit utilization ratio.

Establish credit accounts withsuppliers

If you have long-term relationships with your suppliers, establishing credit accounts can help you build a positive payment history. This will positively impact your business credit score by improving your payment history.

Dispute any errors

If there is any inaccurate information on your credit report, it is possible to work with credit agencies to correct errors and update your information. This is important especially when there is outdated or inaccurate data that is driving your credit score down.

Delete collections debt

When you pay off any debts that had gone to collections make sure you ask the agency to delete the negative account from your report. Paying off the debt will not necessarily remove the account from your business credit report unless you specifically request for it to be removed.

 

Source: Small Business Loans