How to Improve Business Credit Score

Last Updated: 

December 24, 2023

There are many small companies that are unsure about the inner workings of business credit scores. These scores are simply a rating assigned to your business on the basis of its creditworthiness. It is calculated based on past credit history and ranges between 0 and 100. A score of 80 and above is considered to be good. Why is a high business credit score important? Here are a few reasons:

  • It indicates the strength of your business
  • It ensures that you are able to borrow easily
  • You could get a lower rate on insurance policies
  • The borrowing power of your company goes up

Still, not all businesses manage to maintain a high credit score. A lot of business owners tend to wonder, “how do I get a business loan with a bad credit?” The ideal strategy here is to ensure that your business does not reach that stage.

Read on to ensure you maintain a good business credit score by enlisting a few critical do’s and don’ts. By carefully paying bills, managing credit card usage, and choosing the right loan for your business, scores can rise over time, opening up more doors and opportunities.

Key Takeaways on Improving Your Business Credit Score:

  1. Paying Bills On Time: Timely bill payments boost your business credit score as they demonstrate your ability to meet financial obligations. To ensure on-time payments, set reminders or automate bill payments, especially for fixed monthly expenses.
  2. Usage of Your Credit Card: The way you use your credit card impacts your business credit score. High levels of borrowing reflected on your credit card can deter potential lenders from offering new financing.
  3. Use Your Business Credit Card Wisely: To maintain a good credit score, use your business credit card judiciously. Create a weekly or monthly spending plan to avoid unnecessary borrowing and use credit only when absolutely necessary.
  4. Take the Right Loan: Choosing the appropriate type of loan is crucial for your business credit score. Carefully select loans and thoroughly read their terms and conditions to ensure they are suitable for your business needs.
  5. Conclusion: Maintaining a high business credit score is essential for securing future financing on favorable terms. A higher score reduces the likelihood of loan rejection and unfavorable loan terms, especially for businesses concerned about how to get a loan with bad credit.

These takeaways provide a clear guide for businesses looking to improve or maintain their credit scores, emphasising the importance of financial discipline and strategic decision-making.

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Paying Bills On Time

If you are paying all your bills on time, it will boost your business credit score. This happens because timely payments are directly correlated with your ability to borrow in the future. If you have been fulfilling all your repayment obligations, then you will not have to worry about getting a small business loan with bad credit.

It is advisable that you always pay all your bills on time. Two strategies can help you achieve this. First, set reminders related to bill payments. Reminders will help you track your due dates. Second, automate your bill payments. This strategy works for businesses that need to pay out set amounts every month. If you keep paying on time, then your business credit score is likely to remain high.

Usage Of Your Credit Card

Your credit card is another tool that is monitored by the business credit scoring bureaus. The score is directly influenced by the amounts that you are already borrowing. If your credit card shows too much historical borrowing, new lenders may choose to avoid giving you any fresh financing.

Use Your Business Credit Card Wisely

In order to maintain a good business credit score, it is advisable that you use your business credit card in a wise manner. You should only opt for availing credit when there is an absolute need to do so. The best strategy here is to create a weekly or monthly spending plan. Such a plan will help with using your credit card more sparingly.

Take the Right Loan

Choosing the right type of loan is also an important aspect of your business credit score. If potential lenders see your past transactions and question the type of loans that you took, you may not be able to obtain the loans that you need. You need to decide whether instruments such as an SBA loan are suitable for your business.

The ideal strategy, in this case, is to be careful while selecting loans. You should also make sure that you are reading through the terms and conditions of the loan so that you choose the most appropriate option for your business.

Conclusion

While improving your business credit score is crucial, there may be situations where you need financial support before your score has improved. For business owners wondering, 'how do I get a business loan with bad credit,' there are specialized resources available. How do I get a business loan with bad credit offers guidance on navigating the loan process with a less-than-perfect credit score, providing options that can help keep your business moving forward even as you work on improving your credit.

To sum up, if you have been wondering how to get a business loan with bad credit, then the answer is perhaps, but probably with worse terms and a higher likelihood of rejection. Instead, all small businesses should follow the above do’s and don’ts if they want to maintain a high credit score. A higher score will absolutely come in handy when you need financing in the future.

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