Nearly 22% of start-up businesses fail within their first years. One reason is that they can’t get their business finance they get off the ground. Because of this, many are unable to take advantage of opportunities to grow their operations.
One way to prevent becoming a statistic is to strengthen your business credit score. A good credit score can help you get financing quicker and more efficiently. This can give you the boost you need to run a successful business.
How can you do this? Listed below are several pointers to help you leverage your company’s creditworthiness.
1. Understand What Makes Up Your Score
Your business credit score is a numerical rating that indicates the strength of your business’s credit history. The score is based on information in your business credit report, which is compiled by business credit reporting agencies.
If you want to improve your business credit score, you should start by understanding what makes up your score. Your payment history is the most important factor.
2. Pay Your Bills on Time
One of the best ways to improve your business credit score is to pay your bills on time. This demonstrates to creditors that you are reliable and capable of repaying your debt obligations. When evaluating your creditworthiness, creditors will take into account your payment history as a key factor.
By paying your bills on time, you can significantly improve your chances of obtaining business credit in the future. Maintaining a good payment history can also help you qualify for better terms, such as lower interest rates.
3. Keep Credit Balances Low
This means that you should only use a small percentage of the credit that is available to you. For example, if you have a credit card with a $10,000 limit, you should keep your business expenses at $1,000. This will show lenders that you’re a responsible borrower and help improve your credit score.
4. Use a Mix of Credit Products
This means using both business credit cards and lines of credit from different lenders. This will show that you’re a responsible borrower and that you’re able to manage different types of credit products. It can also help you get better terms and rates on future financing.
5. Check for Errors and Fix Them
This can be done by pulling your credit report from all three major credit bureaus and checking it for accuracy. If you find any errors, you should dispute them with the credit bureau right away.
You should also make sure to keep an updated payment history on all of your accounts, as this is one of the biggest factors in your business credit score.
Be Better at Business Finance by Improving Your Business Credit Score
Improving your business credit score is crucial to maintaining a good credit history and improving your chances of getting approved for small business loans and lines of credit.
By following these tips on business finance, you can give your business credit score a boost and improve your chances of getting the credit you need to grow your business.
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