Credit Score: 15 Ways To Improve Your Business Credit Score


When it comes to building your business credit score, it is definitely never too late to start building it up. The advantages received from a good credit score to the business are significant enough to put effort into improving your credit score. Credit Bazaar provides you 15 ways in which you can improve your corporate credit score:

  1. Timely filing: The important thing to remember for every business is filing the tax returns and accounts by the given deadline. The credit reference bureaus have complete information if your accounts have been late filed an is mentioned on the company’s credit reports. It can indicate financial issues and poor housekeeping and can prove as an alarm to the lenders. It is also a wise idea to employ an accountant if you are struggling to be on top of your filing and returns. This is because the credit reference bureaus keep a keen eye on the quality of information that is filed against your business and also whether your accounts have been audited or not.
  2. Ensuring the accuracy of your profile: Many times, business owners find errors in their profile, which is actually very normal. On the brighter side, the business credit reporting agencies are focused on ensuring that data mentioned on your profile is accurate and exact. Basically, they focus on selling access of their information to the lenders, and for this purpose, outdated or inaccurate information is not valued by the receiving party. All the credit bureaus have proper processes for correcting verifiable errors and resolving legitimate disputes. Moreover, in order to qualify for a loan, even minor errors in your business profile can make it a difficult task.
  3. Don’t apply for unnecessary credit: Good cash flow is a strong indicator that you are creditworthy. A note is made on your business credit report each time you apply for credit if you are successful or not. And at the same time, if there is a loan rejection, it can evidently put a stain on your credit score. Furthermore, when numerous credit applications are made by you in a short period of time, it may depict in the credit search on your business. These credit searches are usually recorded on your credit rating and many of them in a short span of time is a depiction that you are failing to obtain funds and also struggling financially.
  4. Sharing necessary data with a credit agencies: If your business is running successfully and is in a decent financial position, it is preferable to share information and data with the credit reference bureaus on a regular basis. The credit reports provided by them include checking your record for information from time to time. Therefore, if you provide them with this updated data regularly, it will only assist them in maintaining an exact credit score. It is also crucial to check that any alternative lenders or banks who you have loans with report regularly to a credit reference bureau. This is because a good payment history with your lender could help in boosting your credit rating incredibly.
  5. Decreasing your credit utilization ratio: One of the prime points that the credit reporting bureaus look at is the credit ratio, which means the credit used in relation to the amount of available credit. This is a crucial factor in determining the credit score of the business and it is generally a great idea to keep the credit utilization ratio under 15%. The few methods in which you can make this happen is increasing your credit limit, paying off your balances, opening a new line of credit, paying your bills more than once a month, and decreasing the credit card spending.
  6. Make the necessary changes when a drop is noticed: Regularly checking the credit score of your business is important for maintaining cash flow and good credit control. You can check the business credit report by contacting the credit reference bureaus who can do the compiling of your data from the public domains concerning your company. It is a good and preferable habit to purchase such reports regularly for keeping a keen eye on any items in the negative or unfavorable category, thereby taking the requires action if any changes are noticed. Such an exercise can protect your credit rating from dropping any further. In order to identify any theft taken place, you must look out for outdated data or information. Furthermore, since every credit reference bureau uses a slightly unlike algorithm for calculating scores, it is a smart idea to check more than one agency’s credit rating on a regular basis. This is preferable as you will then have access to a substantial amount of types of data.
  7. Checking credit score of your customers and suppliers: It is important to monitor the credit score of your customers and suppliers because it means that you are alert and are ready if one of them goes into the administration. In such circumstances, being alarmed will be advantageous as you can take the necessary steps for ensuring your own business and its corporate credit score are not compromised.
  8. Timely payments: One must make sure that they are able to pay their debts and invoices on time whether you are paying the financial lenders or suppliers of the firm. You must pay your accounts off early itself whenever you are in a place to pay up because all the credit agencies review your credit repayment history. Such swift payments will show the lenders that you can positively manage your debts and cash flow. An important point to remember here is that if you have a late payment marker logged on your credit profile, it will stay there for six years for sure.
  9. Dispute any inquiries and errors: A great idea for improving your corporate credit score is to work with credit reporting agencies and credit card companies for the purpose of getting negative feedback eliminated from your business credit file. It is crucial to make sure that what is being reported on the credit report of your business is up-to-date and accurate. Unpaid accounts and hard inquiries can affect your report negatively, therefore, it is important to immediately call and dispute if you see something on your report that should not be there. This is a critical method for improving your corporate credit score.
  10. Pay for delete with collections: In case any of your debts went to collections, you have to pay attention to detail when time comes to make good with them. You have to push the agency and make sure that they delete the negative account from your business credit report. You have to right away ask for such a change because if you don’t then even paying off your debt won’t lead to a rise in your credit score. This will occur if your credit report still shows a recorded history of negative accounts. In order to increase your credit score now, you immediately have to get the negative account history removed for your report completely. If they won’t agree for ‘pay for delete’, there is actually no need for paying the collection agency since your goal of improving the credit score is not fulfilled. This happens as it will affect the credit score irrespective if it is paid or not.
  11. Trade lines: If your company is in requirement of inventory or supplies from outsourced vendors, then it will be very advantageous for your business to establish a trade line of credit. The trade done with the vendors is usually on a monthly basis. That is why a great way to start credit improvement is to ask them to report to the credit agencies. There are high chances that trade credit will be your business’ very first line of credit, so you really have to make sure that they are reporting. Before they give you a credit score, most of the credit agencies make sure that you have at least four open and active trade lines. For getting started, these might seem like too many, but you want the agencies to measure your financial reputation based on numerous varying aspects. Your business credit score will be more accurate if they have a good amount of information. Even a single history of credit from one particular vendor can do wonders for your credit score. However, multiple parties of vendors and suppliers reporting your outstanding record of payments is the best method to improve your business credit score.
  12. Applying for business credit cards: The lenders will conduct a personal credit check if your business is very new or has too little payment history to show. Well, credit is given to fulfill your requirements, so it is not a bad thing as such, however, you have to be wise where exactly you are spending it. The credit history of your business needs to indicate to your lenders that you are using credit facilities, but you are not maxing out on your credit cards. A decent and acceptable ratio is about 20 percent. If you notice that you require more than 20 percent of your credit each month, then it is better to increase the limit or apply for another credit card. It will help you receive benefits the most from it as well as keeping your credit ratio low.
  13. Using credit wisely: As a businessperson, you will have numerous types of credit to choose from for your business such as business credit cards, lines of credit from trade vendors, and bank loans. Be it whatever credit arrangements you choose to opt for, just make sure that you play by the rules. When you represent that your head is right on your shoulders, using credit wisely, the business credit reports will start to signify this fact. Additionally, remember to put your business name instead of your personal name, whenever you use credit. When you are launching a startup, you might have to co-mingle your business and personal finances, which is actually unavoidable. However, over a period of time, you should separate them as doing this will eventually make your business credit history stronger. Also, if you have credit accounts that you hardly use, still it is unadvisable to close them out. You might require them in the future, you never know. Furthermore, closure of accounts reduces the total credit you have available with you, thus increasing your credit utilization ratio, which can lower your credit score. Rearrange and distribute smaller balances on multiple accounts if possible for evenly distributing your debt load. Hence, you will get credit for paying down more than one balance when you are making regular payments on these various accounts.
  14. Setting credit goals: Various ways are available for improving your credit situation, but at the same time there are a number of avenues available to you which can easily make you overwhelmed. The best thing is to check and scrutinize your financial situation closely and set for yourself some reasonable credit goals. Decide for yourself the credit score you are aiming to achieve and what it will mean for your credit health and for your enterprise as a whole. Understanding this entire scenario, will give you some solid vision to hold and work towards, and also keep you disciplined and focused at the same time.
  15. Do not indulge in risky activities: The best method in which your credit rating can be improved is to avoid indulging any risky actions in the first place. When you know an action could bring down your score as well as scare off your card issuers or creditors, avoid participating in that particular financial activity. If you feel a certain business activity could bring you present or future money stress, back out and do not involve yourself in the same however exciting it may seem.

We all know that knowledge is power, and understanding and gaining knowledge about your corporate credit score is financial power. Credit Bazaar allows you to check your credit score, provides credit summary, counseling, credit monitoring, fraud protection, and proper assistance for improving your business credit score which eventually can be very valuable to your business.  

For any queries regarding Credit Score improvement or Loan contact Credit Bazaar CR Arcade 2nd Floor, Opposite Delta Garden, Next to Shree Mahalaxmi Restaurant, Mira Road East, Thane : 401107

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