What are you doing to maintain a positive credit score? As a small business owner, ignoring either your personal or business credit score can cost you. If your company has low credit scores (less than 650), or possibly no credit history at all, your company would be perceived as “risky.”
It all begins by knowing what your score is. Because most lenders will look at a business owner’s personal credit score along with their business score, it’s important to stay in tune with where you stand financially. Fortunately, increasing credit scores is possible, although it will not happen overnight.
There are three important steps you can take starting today to raise your business credit score and stay on the right track:
- Stop using your credit cards for all of your purchases. This is easier said than done, but fixing your credit will likely entail reducing your credit exposure. Use your credit report to control where you are paying the most interest and start by focusing on those credit requirements first. The best advice is to use your credit card when you need to, but not if you can make purchases by other means. Paying a business credit card on time and in full each month is a fast and effective way to demonstrate creditworthiness. Late payments, though, will do more damage than good; they will negatively affect the business credit history you have as of now.
- The next big step you can take is to review your business credit reports. A business credit score is a good predictor of the likelihood of loan repayment or default. With that being said, when you check your business credit report at least once every quarter you will be able to determine if it is accurate and if there are any errors presented. The last thing you would want is for your business to suffer because of an error you did not notice. If you see any mistakes presented, you need to report them right away.
- One last step is to be paying all your bills on time or in advance. Paying on time is the most direct way to drive a positive credit rating. The payment history some companies have with you can have a huge impact on your data in your credit profile and even have perks if you pay in advance.
You can impact your business credit profile, and you can proactively improve your business’s creditworthiness if you take these three steps into account. Improving your credit score is always a good thing.