How to Improve Your Business Credit Score
Whether you are just starting out or you have been building your business for a while, a good credit score is an important asset. It will help when you need to secure a lease and will allow you to pay lower insurance premiums and interest rates when you need to take out a loan. If you don’t have any business credit or your score is lower than you would like, there are several ways to build or improve your score.
Know What Your Score Is
The first thing that you need to do before trying to improve your credit score is to find out what it is. This will let you know how much work needs to be done. There are three major business credit bureaus that can provide you with credit reports for a fee. Dun & Bradstreet provides the most in-depth reports, but Experian and Equifax are options to consider as well. It is a good idea to check your reports at least a few times a year to make sure there are no errors or fraudulent activity.
Use a Variety of Credit Types
When you are working on building or improving your credit score, it can be beneficial to use multiple kinds of credit. Instead of just using a business credit card, consider using an installment loan and a line of credit as well. This will help to better demonstrate your responsibility and trustworthiness in making payments in various situations.
Make Timely Payments
Nothing else that you do will help your credit score unless you are making your payments on time. Late payments will lower your score and make it more difficult and expensive to take out loans in the future. It doesn’t hurt you to make payments precisely on time, but if you can make them early, that’s even better. For some types of scores, the only way to receive the best rating is to make your payments before they are due.
Use Your Credit
While it may seem like a good idea to use your credit as little as possible, this is not the case when you are trying to build your business’s credit score. Using your credit more often gives you the opportunity to make payments that will improve your score. As long as you are consistent about making your payments on time, using your credit is a great way to show that you are trustworthy and able to pay back your loans.
It won’t happen right away, but using a combination of these methods, you can build up your business credit score and put your business on the right track for the future.