Business Insights

How to Boost Your Business Credit Score

Your business's credit score is just as critical as your personal score. It communicates to lenders, customers, and other interested parties the health of your business and its fiscal responsibility and provides strong options for your business’s financial future.

Create a History of On-Time Payments

tablet showing excellent credit scoreWriting for the Houston Chronicle, Chris Joseph identifies reporting activity as a primary factor in determining a business's creditworthiness. Positive payment history - whether on loans, lines of credit, credit cards, or bills - can boost your business's credit score and make you more attractive to lenders. Conversely, late or insufficient payments can ding your score, which will make your business less likely to qualify for loans.

While it's not the only factor that influences business credit, it's a critical component of the entire package. Before you apply for loans or credit, review your payment history and continue to make on-time payments so you look as responsible as possible.

Open Lines of Credit Through Vendors

smiling woman on phone holding credit card

April Blodgett of recommends opening line-of-credit accounts with the vendors you use most often. Suppliers for materials, equipment, and merchandise often extend credit to customers, then report their experiences to the credit bureaus. As long as you pay for supplies and materials on time, you'll see an increase in your credit score.

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Apply for lines of credit sparingly, however, and only open them when you intend to use them. Responsible credit usage is also an important factor in developing business credit, so don't apply for every credit card or line of credit under the sun.

It's also important to have one or two business credit cards. They help establish a positive payment history.

Stop Applying for Credit

In the months leading up to a major business credit application, don't apply for other accounts or loans. An increase in inquiries can ding your credit score because it suggests that your business is in dire need of money. This is why business lending is often a long-term process. You want to build your business credit, then apply for a major loan.

Deal With Delinquencies and Liens

If you have a delinquency or lien on your business's credit report, deal with the problem. Ignoring these blemishes will only make it more difficult for you to get a loan. If you agree to settle the matter (in exchange for having the ding removed from your credit), you'll set your business up for success.

Pay Off Debt Faster

Credit utilization can also impact your business's credit score. Let's say you have a business credit card with a $100,000 credit limit and you make purchases totaling $90,000. That means you're using 90 percent of your available credit - not a good thing.

Low credit utilization, such as under 30 percent of available credit, shows your business can manage debt responsibly. Paying off lines of credit, loans, and credit cards will decrease your utilization and boost your business credit score.

If you hope to buy new merchandise, purchase a new building, or expand your business, you might need a loan. Healthy business credit is the best way to go. For more information about business lending solutions, get in touch with us today.

Topics: Financing


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