If you find yourself being denied for a small business loan, your business credit score might be the biggest culprit of them all. Approximately 45% of small business owners are turned down for loans due to low business credit or personal credit scores. When it comes to repairing/improving a credit score, there are several different options in front of you. While this is true for both personal and business credit scores, some of your options are unique to business credit scores in particular.
Why Your Business Credit Profile Matters
If your business credit is in poor condition, you’re likely to find it difficult to accomplish a number of things that are crucial to the success of any business of any size. A strong business credit profile isn’t just there to help you get a loan when you need one. Your business credit profile also plays a role in how customers/clients perceive you.
Not surprisingly, a strong business credit profile is going to look very attractive to customers, investors, or even potential employees you are pursuing.
You can get a loan with poor credit. However, by taking steps to improve your business credit score, you can get a much better loan with a strong credit profile.
8 Ways To Improve Your Business Credit Score
With so many factors that influence the running of your business, it can be easy to neglect your business credit score. To that end, here are 8 proven ways to improve your business credit score from Steven Millstein of CreditZeal.
- Pay Your Bills on Time: This is right at the top of our list for a reason. Late payments are going to run your business credit score ragged. Keeping up good practices with paying your bills on time will not only maintain a good business credit score, but it will also ensure a good relationship with creditors.
- Keep Your Info Up-To-Date With All 3 Credit Bureaus: Dun and Bradstreet, Experian and Equifax are perhaps the three most noted credit bureaus currently in existence. It is definitely in the best interests of your business to keep your information current with all of them.
- Only Deal With Lenders Who Report To Credit Bureaus: Building business credit can involve borrowing money from lenders, and then making your payments back to those lenders on time. However, if the lenders aren’t reporting to the credit bureaus, making your payments early or on-time isn’t going to do much good for your business. A lender who reports to bureaus is far more reliable than one who doesn’t. Make sure you know for certain, in terms of who you are dealing with.
- File Everything On Time: By “everything”, we are talking about your annual returns and financial accounts. Filing late on anything of these things can cause a number of problems. Fines can begin to fall, and these can pile up rather quickly. Businesses that fail to file their returns and accounts in a timely fashion are often businesses that collapse, long before they even begin to realize their full potential.
- Clean Public Records: Your business credit report is going to include a lot of important things. One such element includes any bankruptcies, judgements, or liens. Court rulings are a form of judgments. If you come out on the losing end of a debt collection lawsuit, this is going to impact your credit rating in some form or another. A lien refers to the rights of a creditor to seize upon your property, unless you pay up a certain owed amount. All of these things can wind up on your business credit report, and all of them can make it difficult to do business.
- Increasing Your Credit Limit: Approximately six months after opening your credit account, you can put in a request to have that credit limit increased. This can be problematic, if you don’t know how to manage your finances. However, if you do, you can lower your credit utilization ratio. This can be a good thing for your business credit score.
- Your Business Credit Score: You can check your business credit score at any time through a variety of different sources. This is invaluable information. It can give you a clear idea of how things stand in the present, and it can show you in no uncertain terms what you will need to do for the future.
- Your Suppliers: One more solid method for improving your business credit score involves making sure things are just fine with your suppliers. By maintaining an awareness of the credit positions of your suppliers, you will avoid the potential nightmare of one of these suppliers going bust, and leaving you to clean up the mess.
Your business credit score is at the centre of your business. Take good care of that score, and it will take good care of you.