Your business credit score indicates the creditworthiness of your company. If you have a high score, you will more easily get approved for funding and will be able to negotiate favorable agreements with landlords, vendors, credit card companies, and others with whom you do business. If your credit score is poor, however, you will miss opportunities that will help your company thrive. Here are some steps you can take to improve your business credit score.
Use Credit Responsibly
When you obtain a new line of credit or credit card, resolve to use the credit responsibly. If you use these financing tools only for specific reasons, such as to pay your bills or restock your inventory, you will be able to track and control how much you spend.
Pay on Time
One of the most effective ways of boosting your business credit score is to always pay your bills on time or early. Be sure you have quality software that can monitor your cash flow, remind you of payments due, and automatically take care of regular payments such as utilities.
Watch Your Credit Utilization Ratio
Your company’s credit utilization ratio is the volume of credit you have utilized compared to how much remains available. Experts agree that you should generally have a 30 percent CUR, which means that you should not use more than 30 percent of your possible credit.
Under certain circumstances, the consolidation of your debts may increase your business credit score. For instance, a new loan to handle credit debt may decrease your credit utilization ratio, and consolidating debts may make it easier for you to make timely payments.
Keep Your Information Updated
Periodically monitor the information that the major credit bureaus have collected about your business. If you find anything that is outdated or inaccurate, contact the bureaus so they can make corrections. Additionally, if you have good relationships with your suppliers and make your payments on time, ask them to send trade references to the credit bureaus.
For more advice on increasing your business credit score, contact DAL Commercial Capital.