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5 Quick Fixes to Improve Your Business Credit
Your business credit score is one of the first numbers lenders will use to gauge your ability to manage your finances and pay off any potential loans they grant you. If your business credit score is low, you may be seen as too big of a risk, so you may want to improve your business credit before try
- Business Credit Requirements and Credit Scores
- Business Credit Fix #1: Business Credit Error Checking
- Business Credit Fix #2: Proactive Business Credit Reporting
- Business Credit Fix #3: Reduce Your Business Debt
- Business Credit Fix #4: Pay Business Debts on Time
- Business Credit Fix #5: Get More Business Credit
- Related Questions
- Get Financing
How risky are you and your business? Your business credit score is one of the first numbers lenders will use to gauge your ability to manage your finances and pay off any potential loans they grant you. If your business credit score is low, you may be seen as too big of a risk, so you may want to improve your numbers before trying to convince a lender that you’re good for the money.
The proof is in the numbers, my friend.
Business Credit Requirements and Credit Scores
You’re probably familiar with the ins and outs of your personal credit, but what about your business credit? In some ways, the two are very similar. Business creditworthiness is gauged on some of the following:
How often do you pay your bills?
What’s your credit history like?
How much credit do you have available, and how much of that have you used? (This is your debt-to-credit ratio)
What are the most important factors to consider when improving my business credit?
The most important factors to consider when improving your business credit are:
What are the best ways to build business credit quickly?
The best ways to build business credit quickly are to open business accounts, even if you don’t end up using them all, and to contact current lenders with which you have a good relationship to see if they’ll withdraw negative reports from your business credit report. Additionally, you can open a business credit card or small loan to increase your debt availability and improve your business credit score.
For more information on building business credit, please visit this page.
If you have any questions about small business lending, please contact us -- it’s free and we’re happy to help you on your way to your dream!
How can I access financing with bad business credit?
If your business credit is not great, you may still be able to access financing through traditional bank financing, CMBS loans, hard money loans, and private money loans. These loans may come with higher interest rates and shorter terms, so you'll want to be confident that your business can handle that kind of pressure before applying. Additionally, you may be able to access short term business loans, though these may limit your funding amount and often demand higher APRs than other loans.
We can help you with that — fill in your details in the form below, and we’ll get to work.
What are the benefits of having a good business credit score?
Having a good business credit score can help you get access to better loan products with more favorable terms. A good business credit score can also help you get access to larger loan amounts and lower interest rates. Additionally, having a good business credit score can help you build relationships with lenders and vendors, which can lead to more opportunities for your business.
For more information on how to improve your business credit score, please visit this page.
What are the risks of having a bad business credit score?
Having a bad business credit score can make it difficult to get approved for a loan, and can even lead to higher interest rates and fees. It can also make it difficult to get approved for a line of credit, and can even lead to higher interest rates and fees. Additionally, it can make it difficult to get approved for a business credit card, and can even lead to higher interest rates and fees. Finally, it can make it difficult to get approved for a merchant account, and can even lead to higher interest rates and fees.
If you have a bad business credit score, you may not be able to get approved for a loan, line of credit, business credit card, or merchant account. Additionally, you may be charged higher interest rates and fees if you are approved for any of these products.
For more information on how to improve your business credit score, please see our article 5 Quick Fixes to Improve Your Business Credit.
Business credit scores are on a 0 to 100 scale, which differs from the much higher numbers you’re used to seeing on your personal credit report. Most lenders prefer scores of 75 and higher. If you’ve already requested your business credit score and aren’t happy with what you see, you can (and should!) take steps now to improve it. Check them out:
Business Credit Fix #1: Business Credit Error Checking
Get up close and personal with your business credit report and check it for errors. You can report any errors you find to the relevant credit bureau and formally file a dispute to request they be corrected. The credit bureau gets 30 days from the date you file to verify your correction(s) and make the update(s) to your business credit file.
To do: Get a copy of your business credit report from one of the major credit reporting bureaus like Experian or Equifax, and check it for errors.
Business Credit Fix #2: Proactive Business Credit Reporting
Your business credit score rises along with the number of vendors reporting a positive credit history for your business. Since vendors don’t have to report business credit transactions, they often don’t bother to take the time. But if you proactively and specifically ask your business vendors to make positive transaction reports (assuming, of course, you’ve earned them), you’ll get the benefit of a better business credit score.
Learn More: How To Get an SBA 7(a) Loan with Bad Credit?
To do: Reach out to the vendors who you have a great rapport with today, and ask them for a positive transaction report.
Business Credit Fix #3: Reduce Your Business Debt
Most credit bureaus recommend that you keep your business debt below 20 to 30 percent of your total business credit limit, and you get bonus points if you do. If you’ve been borrowing too much of what you’re allowed, it’s a red flag that your business is struggling and might not be strong enough to handle additional an loan. Paying off some of your business debt before you apply to lenders can help your chances of being approved. They’ll be relieved to see you have more breathing room should a minor crisis arise (such as business expenses increasing or profits taking a dip).
To do: Make, and implement, a plan for paying down your business debt to below 30 percent of your credit limit.
Business Credit Fix #4: Pay Business Debts on Time
Lenders look at patterns to determine the likelihood of your success. If they can see proof that you’re already consistently and promptly making payments on other business debt, they’re more likely to trust that you’ll do the same with anything they lend. If you haven’t been timely or consistent, you may want to talk to your existing lenders to see if they’re willing to remove any late fees or withdraw any negative reports on your business credit report. Especially if your lapses have been few and recent, it’s definitely worth a try.
To do: Contact current lenders with which you have a good relationship to see if they’ll withdraw negative reports from your business credit report, especially if your slip-ups are few.
Business Credit Fix #5: Get More Business Credit
The more business credit you’ve got, the more data potential lenders can access to determine their risk. And as discussed above, the more credit you’ve got that isn’t being used, the better your business credit score will be. If you’ve barely got any credit, future lenders can’t accurately determine how creditworthy you are. So opening business accounts, even if you don’t end up using them all, can be a good thing: Open accounts Improve lender relationships. If you’ve already got a business loan, you can ask stores to open credit cards in your business’ name. The greater your debt availability, the greater your business credit score will become.
To do: If you don’t have business credit, open a business credit card or small loan.
Building business credit is a great first step to getting the additional funding you need. Contact us with your questions about small business lending -- it’s free and we’re happy to help you on your way to your dream!
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