Improve Your Business Credit Score With These Strategies
As a business owner, having good credit can make a world of difference. Business credit is essential for obtaining the funding necessary to purchase materials, secure vendors, buy equipment and establish trust with everyone from suppliers to lenders to building owners. In short, good credit is essential for business growth. If you know that your business’s credit score is less than stellar and if you are looking for ways to improve it, keep the following advice in mind:
Know Your Score
You can’t improve your credit if you don’t know your score. Check your credit score often and make sure that everything is accurate and up-to-date. If your credit score is closer to 100, you’re doing just fine and represent a very low risk to lenders. If your score is between 50 and 70, you have room for improvement, and if it’s below 50, you need to take drastic measures to boost it.
Establish Business Credit
If your score is low, it may simply be because you have not opened a line of credit for your company. This is easily remedied. Start by researching lenders that cater to startups and small business owners. Look for lenders that report trade information, as it won’t do you any good to obtain a loan that won’t be reported to the business credit bureaus. Apply for microloans with terms that you can easily meet to start with, as the goal is to establish trust so that you can eventually pull out a bigger loan when you need it.
Pay Your Creditors On Time
The worst thing you can do for your business credit score is to make late payments or fail to make payments at all. Only keep one or two lines of credit open to make it easier for you to remember who you owe, and write down the due dates in your calendar. If necessary, set reminders on your phone, or schedule a few payments in advance. By doing this, you can keep up to date on your credit and therefore, ensure that your score is always rising instead of being dinged by constantly late payments.
Maintain Good Spending Habits
Don’t put anything on credit that you don’t need to put on credit so that you can avoid building up mass amounts of debt. Also, only buy what you can afford and need. Too often people use credit as a way to purchase luxury items, which is how they get themselves in the hole in the first place. Don’t do this to yourself and use your lines of credit to fund growth and nothing more.
Building good business credit takes time and concerted effort, but it’s well worth it. By following the advice above, you can establish good credit and ensure that you at least have the ability to obtain funding if you should ever need it.