If your company needs a small business loan, an important factor for approval is your credit score. A strong credit profile for your company will also cause potential partners, suppliers, and customers to look at you more favorably. Here is a step-by-step guide to assist you in improving your business credit rating.
Update Your Information
The three most important credit bureaus for businesses are Experian, Equifax, and Dun & Bradstreet. Each has a distinct formula for calculating business credit scores, and because creditors, vendors, or customers may check any of them for your company’s credit information, you should keep the information in all of them up to date.
Use Lenders That Report Payments
Obtaining a small business loan can improve your credit if you are diligent to make timely payments. However, this only works if your lender reports the payments you make to the major credit bureaus. Prior to taking out a loan, find out if the lender reports payments.
Set Up Trade Lines with Vendors
Working with suppliers that offer trade credit can help improve your company’s credit rating as long as you follow the terms of your mutual agreement. You may have to request that your suppliers report your on-time payments to the credit bureaus.
Pay on Time
Finding lenders and suppliers that report your payment history will only improve your business credit if you make all your payments on time or even early. Additionally, watch your credit utilization ratio. This is an assessment of how much credit you use compared to how much is available to you. Ideally, you should only use 20 to 30 percent of your available credit.
Avoid Negative Marks in Your Public Records
Records that you file in your company’s name such as liens, judgments, and bankruptcies negatively impact your business credit score. Avoid these if at all possible, because they remain as negative marks on your credit records for years.
For more advice on building business credit, contact Porter Capital Group.