Ways To Improve Business Credit Scores

If you own a business and want to be approved for a loan, a credit line, a lease agreement, or any other financial transaction, it's very important to have a strong business credit history to rely on. Based on a good business credit score, you may have faster access to a credit line without providing personal guarantees and also have a lower interest rate which means lower costs over the long run for your business.

But what can influence your business credit profile and what can you do to improve your business' creditworthiness?

Just like with your personal credit report, you can access the services of the business credit reporting bureaus such as PayNet and Dun & Bradstreet to view your own report for accuracy. Make sure all entries on your account are accurate and monitor your business credit profile regularly (at least twice a year).  The process of correcting mistakes could take up to 30 days; which is why it's so important to keep a vigilant eye on your personal and business credit reports.  Don't wait until you are applying for a loan your business needs to find out that your business credit profile is inaccurate.  Just like fraud can occur with personal credit, businesses can become victims as well.

The capital structure of your business is an important element of your creditworthiness. If other companies see a lot of debt on your balance sheet, they are less likely to give or extend credit because you pose greater risk of default. It's imperative to limit the amount of debt your business carries.

Do your best to increase the number of credit transactions for your business. Having little or no activity on a business credit report can result in a lower business credit score. Lenders want to know that you have an ongoing ability to pay your bills and that you are not approaching bankruptcy. Creating small loans periodically and making timely payments typically increases your business credit score.   

Paying your bills on time and respecting the terms set forth by your suppliers is a key element for a good business credit score.  Many of your vendors may report payment information to the business credit bureaus. The payment experiences other companies have with you greatly impacts your business credit profile. In fact, paying your invoices 10, 15 or even 20 days ahead of the due date can classify your business as one that pays 'better than terms'. And this will be a big plus for your business credit score.