Most people know that their personal credit score can have a big impact on their financial strength, but not everyone knows their business credit score can help or hurt them when it comes to business goals. The business score of a business helps suppliers and creditors determine how risky it is to do business with a company. If your business has a good credit score, it can expand your opportunities, but a bad score can hold you back. Here’s how to improve your business credit score.
The Range of Business Credit Scores
While consumer credit scores range from 300 to 850, business credit scores range from 0 to 100. For your business to be considered low risk, your business credit score needs to be 80 or higher. Scores between 50 and 79 are typically considered moderate risk. Some of the factors that go into your business credit score include your payment history, total outstanding balances, the size of your business, and the number of trade experiences your business has.
A good business score gives you an opportunity to obtain lower interest rates and longer repayment periods. When working with vendors, a good credit score may help you to get discounts or better terms on credit.
Steps to Take to Improve Your Business Credit Score
If you don’t have a good business score, there are steps you can take to improve your score. One of the most important factors that affect your score is your payment history, so pay all of your bills on time without fail. If you’ve made payments late in the past, it’s time to get caught up and work on developing better habits.
Consider what issues your company is facing when it comes to paying bills. Do you use software or manual tracking systems? To ensure you stay on top of your bills, you may want to consider whether it’s time to upgrade your accounting software.
Business Credit Cards
If your business hasn’t established a credit history, a business credit card is a good place to start building credit. Once your business has a credit card for expenses, be responsible with it. Keep your credit utilization low. This means avoiding using more than 30 percent of your available credit. Set up reminders when bills are almost due. Work on paying off the whole balance whenever you can and avoid relying too heavily on a business credit card.
Know What’s on Your Business Credit Report
Business credit information is collected by Equifax, Experian, and Dunn & Bradstreet. Review what’s on your business credit reports to make sure there isn’t any inaccurate information. Look for errors in your payment history or total amount owed and get in touch with the credit bureaus right away if you find an error. If you have had good experiences with suppliers, ask them to give you a trade reference.
Be proactive about taking care of both your business credit score and your personal credit score. Dovly is an automated credit repair engine that can help you get ahead by removing your innacurate/incomplete information from your credit report. Try it risk-free with our free membership tier.