5 Smart Tips to Improve Your Business Credit Score

Just similar to a personal credit score, there is a credit rating for businesses too.  A business credit score is not merely a number, but it helps banks or investors to decide whether or not your business is eligible to get a loan.

A good CBIL score will help you get business loans faster and at a lower rate of interest. 

But what if your credit score is not up to the mark? Some of the smart tips we share can help you raise your business credit score:

1. Make payments on time 

This is quite simple to understand that making payments on time is important for a business’s success and financial health. 

But if you delay in making payments or bills, this will damage your credit rating and will affect your credit report

Furthermore, it is important to repay debts to maintain a good credit rating. This alone assures lenders to invest in your business since you can repay them on time.

2. Pay attention to credit utilization ratio

One of the main points most lenders consider while checking a credit report is the credit card utilization ratio. 

It is the proportion of the amount of credit used and the total amount of credit available. As per an article published in CNBC, it is good to maintain a total credit utilization ratio below or equal to 30%. 

Some of the tips to maintain the ratio are:

  • Clear all your debts;
  • Ask your credit card provider to increase your credit limit;
  • Limit credit card spending;
  • Pay your bills on time.

A higher ratio indicates that your business is struggling to clear its debts or bills. 

3. Review your business credit report

Ask your credit reporting company for a business’s credit report so that you can review it. 

This will help you to know what you’re working with, what is affecting your report, and even can take necessary steps to improve your score.

If you find anything wrong with the report, you may ask your agency to clear all your negative elements.

It is very important to regularly audit your business credit report to overcome mistakes that may harm your credit score.

4. Get a business credit card

Having no credit card for business will put the lenders in turmoil, as they will not have a payment history to decide whether to approve your loan application or not.

Instead of using a personal credit card, apply for a business credit card. Getting a credit card plays an important role in fulfilling basic business needs and it also improves the credit score.

It is handy and can be used at the time of emergency expenses such as paying workers, purchasing equipment, or running daily operations.

5. Work with suppliers who report to a credit agency

It is important to maintain a good payment relationship with the suppliers you work with. 

This can boost the number of positive payments to your report and can raise your business credit score. 

But in case your suppliers don’t report credit history to the credit bureaus, then you may fail to make a good credit profile. 

Moreover, not all suppliers report to credit agencies, but you can add work references to your credit report manually through the credit bureaus.

In the end…

Above all, a good credit score plays a crucial role in the success of getting a working capital loan for your business to work well. 

Follow the above-mentioned tips to make sure that your business credit report reflects a good credit score.

For more information, free feel to call us at 703-399-1685