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How to Improve Business Credit

Published By Janet Gershen-Siegel at May 11th, 2018

Improve Business Credit the Easy Way

Do you know how to improve business credit? We break down the most important things you need to know to ensure better corporate credit.

Improving your business credit scores means that your business obtains opportunities you never felt that you would. You can get new equipment, bid on realty, and cover the company payroll, even when times are a bit lean. This is particularly helpful in seasonal businesses, where you can go for several months with simply nominal sales.

Due to this, you should really focus on developing your company credit. Enhance and maintain your scores and you will have these opportunities. Do not, and either you do not get these opportunities, or they will cost you a lot more. And no business owner wants that. You ought to know what affects your company credit before you can make it better.

Credit History Length Is Vital

This is generally how long your firm has been utilizing business credit. Needless to say newer small businesses will have short credit histories. Though there is not a lot you can particularly do about that, do not fret. Credit reporting agencies will also consider your personal credit score and your very own record of payments. If your own personal credit is excellent, and especially if you have a reasonably lengthy credit history (that is, you did not just get your very first credit card fairly recently), then your consumer credit can come to the rescue of your company.

Obviously the converse is also right– if your individual credit history is poor, then it will impact your company credit scores until your business and personal credit can be split.

Do not Let Your Credit Utilization Rate Hurt Your Small business

Your credit utilization rate just signifies the amount of cash you have on credit which is then divided by your overall available credit. Lenders typically do not like to see this exceed 30%. So for every $100 in credit, do not borrow on over $30 of that. If this percent is climbing, you’ll need to spend down and pay off your financial obligations ahead of borrowing more.

Your Payment History Truly Matters

Overdue monthly payments will influence your small business credit score for a good seven years. If you pay your company (and personal) debts off, as rapidly as possible and as fully as possible, then you can make a very real difference when it concerns your credit scores. Make sure to pay punctually and you will enjoy the rewards of punctuality.

Your Personal Credit Can Have a Bearing on Your Corporate Credit

A bad business year could land on your personal credit score. And just in case your firm has not been around for too long, it will directly have a bearing on your corporate credit. Fortunately, you can unlink the two by taking measures to uncouple them. For instance, if you get credit cards solely for your company, or you open up business checking accounts and other bank accounts (or even get a business loan), then the credit reporting agencies will start to treat your individual and corporate credit on an individual basis. Also, make sure to incorporate, or at the very least file a DBA (doing business as) status. You can also pay for your company’s invoices with your firm credit card or checking account, and make certain it is the company’s name on the bill and not your own.

The Credit Reporting Agencies Can Just Plain Get it Wrong

Just the same as every single organization out there, credit reporting agencies such as Equifax and Experian are only as good as their information. If your company’s name resembles another’s, or your name is a lot like another business owner’s, there can potentially be some mistakes. So keep an eye on those reports, and your company report at Dun & Bradstreet, PAYDEX. Remain on top of these reports and challenge charges with paperwork and transparent communications. Do not just let them stay wrong! You can correct this! And while you’re at, it you should also be checking the credit reporting agency which just handles consumer and not corporate credit, TransUnion. If you do not know the way to pull a credit report, do not fret. It’s easy.

Once you recognize what impacts your corporate credit scores, you are that much closer to how to improve business credit. Learn more here and get started toward building business credit attached to your company’s EIN and not your SSN.

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