Tips to Help Increase Your Business Credit Score
04 Aug, 2016 / Comments: Comments Off on Tips to Help Increase Your Business Credit Score / By William Mahnic
Business credit scores are not the same thing as consumer credit scores, which means different factors are taken into consideration in order to create them. What works for your personal score might not work for your business score. Here are some tips on how to get your business score up to where lenders want to see it, making you a good risk for certain business loans.
Ask Vendors to Report Your Payments
Not all vendors report to business credit reporting agencies. If you make your payments on time, this will not help your business credit because no one else can see your timely payments. One way to rectify the situation is to ask your vendors to report your payments. This will help you start to build up credit faster, enabling you to gain access to more capital and vendors to continually build your business.
Ask for a Credit Line Increase
Just like consumer credit, your utilization rate plays an important role in your business credit score. The lower your utilization rate is, the higher your credit score becomes. If your business credit is maxed out right now, you can ask your credit holders to increase your limits. This is not necessarily to use the credit, but to decrease the amount of debt you have outstanding in comparison to the amount of credit you have available to you. After a month or two, this can help to increase your credit score.
Check your Business Credit Report
Errors happen, especially on business credit reports. Pulling your business credit report does not have any impact on your consumer report, so pull it as often as you see fit. When you obtain the report, evaluate it for accuracy in terms of outstanding credit amounts, payments made, payments due, and any negative credit information that might be reporting. If you notice any errors, have them fixed right away with the reporting agency in order to increase your credit score.
Keep Accounts Open for the Long-Term
Do not make it a habit to open up an account, utilize the credit and then close the account. A large part of your business credit score is based on the length of time your accounts are open. If you have only short-term accounts, your score never has a chance to increase. Rather than closing accounts, let them sit idle. Even though they will not provide you with new credit reporting, they will lengthen the average age of your credit lines, enabling your score to increase and making it easier to obtain new credit.
Make Your Business Attractive to Creditors
Your business needs to be attractive to creditors in order for them to extend credit lines to you. This could mean a few things, such as incorporating your business to make you look more legitimate, pay your bills early when you can, and have a business plan to make your business look appealing. When creditors see how serious you are about your business, they are more likely to provide you with credit. The more businesses that extend credit to you, the higher your credit score will climb as long as you make it a habit to pay your bills on time and do not overextend yourself.
Business credit plays an important role in any business’ life. If you want to succeed, you have to start building your business credit score right away. You are never too new or too small to get started; the earlier you get your credit started, the more successful you will be in your endeavors to have a good business credit score.