Ways to Improve Your Business Credit Score

3 min read

Executive Summary

A business credit score can affect a wide range of financial business decisions and can be crucial to obtaining approval for financing, so it’s important to conduct a business credit check and understand how business scores work. If you're looking to improve your score, consider these tips.

Disclaimer: Our first priority is giving you the best financial advice for your business. Tillful may receive compensation from our partners, but that doesn’t affect our editors’ opinions or recommendations in the content on our website. Editorial note

Most people are aware of their personal credit score. However, many entrepreneurs don't realize that they could have a separate credit score for their business. Like personal credit scores, business scores assess a business's financial standing and its capacity for loan repayment.

A business credit score can affect a wide range of financial business decisions and can be crucial to obtaining approval for financing, so it’s important to conduct a business credit check and understand how business scores work. If you're looking to improve your score, consider these tips.

Examine Your Report

While you can acquire a free business credit score from various resources, you might not obtain the entire picture compared to a paid service. Alternatively, you could obtain a report from any of the major reporting companies.

Once you identify your score, you'll understand what you're dealing with and could obtain the necessary information to boost your score, including accounts that affect your report negatively as well as any disputable items.

Make timely Bill Payments

The easiest means of enhancing your business credit score involves timely bill payments. Remember, missed or late payments adversely affect your business credit score. Consider setting up reminders or signing up for an autopay bill function to stay on top of due dates. If possible, you could pay twice a month.

Dispute any inquiries and errors

It's possible to collaborate with credit card firms and reporting agencies to ensure the removal of negative feedback from your file. Make sure you verify whether your report has precise and updated information. Beware that unpaid accounts and hard inquiries influence your report negatively. Therefore, if you notice anything that shouldn't be on the report, dispute it. This offers a crucial means of improving your business score. It is therefore important to do your business credit check often.

Open a business credit line before it becomes necessary

Obtaining a credit line will help build your score. Nevertheless, you must pay off the balances. If you develop a habit of making prompt and consistent repayments, you'll come across as a trustworthy borrower.

It's equally an opportunity to distinguish between business and personal expenses by having a credit line purposely for business needs.

Obtaining a credit line will prove beneficial in your daily business functions. You'll find it useful when contingencies or emergency expenses arise. You could tap into a credit line for short-term costs, for instance, purchasing inventory, paying contractors, or maintaining daily operations.

Avoid applying for Loans Frequently or New Business Cards

It's worth maintaining low debt obligations while ensuring you can manage the loans and credit cards you've taken. Lenders and banks prefer fewer obligations before you can assume more debt. The application of new loans or business cards will yield several credit inquiries and reflect negatively on your credit report.

Lower Credit Utilization Ratio

Reporting agencies will examine the credit ratio you used with the credit amount available. You should maintain a 15% credit utilization ratio to enhance your credit rating. You can do this by requesting your credit card firm to boost your spending limit. Ensure you decrease the money you spend on credit to enhance your score further.

A business's credit score mirrors your finances' health, so you must perform a business credit check regularly to ensure business growth. 

About the author

Krishna Vempati

Written by Krishna Vempati

Krishna is a Senior Product Manager at Flowcast and Tillful, where he is working on building the next-generation credit score and tools to empower small business owners. Krishna has over 10 years of experience building, launching and scaling B2B products, specializing in financial services and platform integrations. In his free time, Krishna likes reading books and brushing up his programming skills.

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