Banks and financial institutions pay a lot of attention to credit score before approving loans, and the best terms are offered to the businesses with the best credit scores.
Here are some ways to boost your business credit score:1) Assess the credit report:
A credit report can be obtained from any major reporting company like Experian, Equifax, or Dun & Bradstreet. Although you will have to pay a fee in order to obtain your business credit report, going through it is an essential first step towards optimizing your credit score.
When you know your credit score, you know where you stand and also obtain essential information
needed to up that standing (such as any items that are disputable or accounts that are impairing your
score).
2) Pay bills on time:
This is perhaps the simplest way to lift your credit score significantly. Exceeding bill due dates will not
only have a negative impact on your credit score but will also nullify any other efforts you are making to
raise your score because you will still essentially be portraying your business as a debt risk.
3) Control business debt:
Term loans, credit card balance, and any other credit line show up as liabilities on a credit report. In
other words, the higher your loans and debt, the lower your credit score will be. Lenders are reluctant to
provide loans to businesses that already have a mountain of outstanding debt. To prevent such a
situation from occurring, consider paying off old loans as soon as possible.
4) Reduce the credit utilization ratio:
Credit utilization ratio is the ratio of used credit in relation to the credit amount that is available – and it
is an important consideration for credit reporting agencies to determine credit scores. Ideally, this ratio
should not go above 0.15 or 15%.
To pull and keep the credit utilization ratio down, you can:
– Pay off balances.
– Increase credit limit.
– Reduce credit card spending.
Final Word:
Your business credit score plays a crucial role in helping you secure a loan – as well as in a number of
other things. Even if your credit score is not where you want it to be, there are plenty of ways to hit your
target number.
