As a small business owner, one of your most important assets is a strong credit rating. While your personal credit score will have a small impact on your viability for gaining funding, your business credit score will be the one that determines whether you will qualify for loans and lines of credit with vendors.
Your business credit score is a reflection of the financial health of your company. Boosting it will require a bit of time but will be worth the investment. When you increase your business credit score, you will open up more opportunities to expand your business, reach more clients, and build a solid reputation.
Most businesses need to borrow money to get off the ground and to help build their companies. In order to get the best interest rates, longer repayment terms, and larger lines of credit, you need to have a good credit score. The good news is you have a few options to help you bring up your business credit rating. From looking into a local tradeline supply company review to making sure that your credit report is accurate, let’s take a look at a few ways to boost your business credit score.
Pay On Time
Making all of your payments on time or even a bit early can quickly boost your credit score. Vendors appreciate customers that can pay their invoices early as it reduces their collections burden. Making your bill payments, a priority will pay off with a heightened credit score. To help you pay your bills on time, it’s helpful to make a spreadsheet of your payables. Making a payment schedule for each of your debts will help you to balance your budget. It can be helpful to arrange automatic online payments for your regular bills, including your rent, insurance, and loan payments.
Review Your Credit Report
Lenders gain access to your credit rating through two or three national credit bureaus. It is helpful to make sure that your accounts are accurate at all of the bureaus to maintain the consistency of your records. As a business owner, it is imperative that you review your credit report for errors or inaccuracies. Old tradelines that have been resolved should not show up negatively on your credit report. If you find any errors, it’s essential to contact the bureau and the lender to remove them.
Keep a Low Credit Utilization Ratio
Your credit utilization ratio uses the amount of your available credit against the amount that you are using. The more credit you have that you aren’t using, the lower your ratio. Lenders want to see that you are qualified for more significant credit amounts but pay off your balances on time. The average credit ratio is 30%. However, if you want to impress lenders, it’s best to get your ratios below 10%. Here are a few ways to lower your credit utilization ratio:
- Make smaller payments more often throughout the month to pay off your current balance.
- Keep your balances as close to $0 as possible
- Open a line of credit without using it
Open a New Business Credit Account
Having more than one business credit account can help to boost your credit score. The key is to have one or two main credit lines that you use for your business and one that you have open but rarely use. Maintaining a zero balance on a line of credit for your business can help to boost your score. You may want to apply your extra credit card to a dedicated small expense like office supplies to ensure that the balance is always manageable.
Whether you are just starting or your business is already established, maintaining a good credit score is crucial to your success. Follow these tips to help you boost your business credit score today.
Source: The Startup Mag Feeds
Author: Phillip Hofmann