Your company’s business credit scores determine if your business is deemed to be creditworthy in the eyes of lenders. You have to remember to treat and care for your business credit in the same way that you care for your personal credit.
Business credit scores and ratings are a very important component in financing and growing your company. If you have applied for credit cards or loans, you probably have realized that your business credit scores affect the interest rates on loans, and it determines the credit card limits that you get on your business credit cards.
There are several parts of your business that your business credit will affect. To give you a better chance of getting a higher credit card limit and a low-interest loan with better terms and conditions, here are three ways that you can boost your business credit scores:
- Build a Stable Credit Profile: A large portion of your business credit rating/score is based on what’s found on your business credit report. You have to be active in making sure that the information found on your business credit report is consistent with Equifax, Experian and Dun & Bradstreet credit bureaus. If you notice that your suppliers or vendors aren’t showing up on your credit files then you might want to subscribe to DNB trade reference builder. Moreover, the DNB trade reference serves as a way to help your business build credibility with anyone who views your business credit file. Remember that you have to keep your debt-to-credit limit ratios low, you don’t want to risk looking overextended. This can make lenders deny your loan or credit card application.
- Pay on Time: Paying on time on all debts is critical for your business credit score. When lenders and banks pull a hard copy of your business credit score they are looking heavily at if you make your payments to debtors on time. It’s important that you plan to make all your invoices 10,15, or even 20 days ahead of the actual due date. Having the approach to pay before the due date will classify your business as one that makes payments “better than terms,” and this looks great on your business credit report. It shows debtors that your business is up-to-date on current debts. Also, paying before the due date can make your business credit scores increase significantly, giving you better interest rates on your business loans and credit cards.
- Establish a Reporting Bank Loan: Getting a bank to report on your businesses credit files is something that will make the process of being approved for that $100,000 loan easier. Here’s how Reporting Bank Loans works, you basically secure a loan with the bank through a certificate of deposit into a CD account at a bank that’s approved by the Small Business Administration (SBA). Once you make the deposit of the amount that you want in the CD account, the bank will match 100% of the value of the CD. When you’re applying for these loans make sure that you have the Federal Tax ID number of your company. The bank will report your payments to Small Business Equifax and Corporate Experian. One tip that you want to keep in mind is that not all banks offer Reporting Bank Loans, and the banks that do offer these types of loans will require a $5,000 deposit. Another great feature of this loan is that it will increase your creditworthiness. A lot of creditors understand the rigorous process of getting a business loan, so to have a Reporting Bank Loans shows creditors that your business is good to establish a loan with.
These are only a few tips to get you started on boosting your credit score. Eventually, you’ll want to get your business credit to a place where you can get approved for great terms and conditions on a loan, and you’ll be able to get the credit card limit that you need to build your business.