When you first get your business credit score, it will be based on both your personal credit and your business credit.
But as you have more history with your business, and you increase your business credit score, it will have more reach and more impact that your personal score. The main reason is that the business credit score is used in more areas than just financing.
For example, if you’re looking at loans, equipment leasing, partnerships, new vendors, contracts with large businesses or governments, your business credit will most likely be evaluated.
Having this strong business credit score will definitely assist in future transactions.
So, how to improve your business credit score?
First, check your credit report
You first need to check your credit report on Dun & Bradstreet, Equifax, and Experian. Getting the reports will provide you with insight into how to improve. You can see what is negatively affecting your score, check to see if the information is correct, and dispute any miss reporting on your credit report.
Pay your bills on time
This is fairly straightforward, but this can have a large impact on your score. So be diligent to ensure that you get your bills paid, and in a situation where you’re having issues, contact your suppliers to work out a resolution instead of letting negative reporting to occur.
Lower your credit utilization ratio
As a rule of thumb, keeping your credit utilization under 15% is best. There are a few ways this can be achieved.
Lower your balances: Try to lower your balances where you can, as this will assist you in getting better credit.
Increasing your credit limit: Generally if you have a good track record, a simple request for increasing your credit limit should be approved, which intern will automatically decrease your utilization.
Decrease your credit card spend: Use alternatives to spending funds on your credit card, such as payment plans, leasing and other options.
Create a new line of credit: Just having a few lines of credit sitting there means you increase your credit limit, but because it exists and you don’t use it, this means your overall utilization on the cards you have decreases.