Your business credit score provides a snapshot of your company’s financial health, as well as your ability to meet your obligations. When your score is less-than-stellar, you might be left searching for ways to improve business credit and manage your financial reputation.
Here, we’ll show you why your score matters, and offer you some simple tips to strengthen your score and credit profile over time—even if it’s seen better days.
What is a Business Credit Score?
Like your personal credit score, your business credit history reflects your company’s history of handling financial commitments. It will often be used to evaluate your eligibility for future loans and other programs.
While your personal credit score ranges from 300 to 850, your business credit score will typically be evaluated on either a scale of 1 to 100 or from 101 to 992.
Why is My Business Credit Score Important?
A less-than-ideal credit score can be bad for your business. Without good credit, you could be turned down for a business loan, or you may not receive favorable terms when opening a bank account or a new line of credit.
In other words, the better your credit score is, the better chances you’ll have of gaining access to the tools and resources you need to flourish in business.
What Can Lower My Business Credit Score?
A low business credit score can point to several possible factors:
- Your business is new and hasn’t generated much credit
- You’ve made slow or late payments to your creditors
- You’ve opened too many business credit cards in a short period of time
Understanding the reasons for why your score is what it is can help you find ways to improve business credit over time and avoid setbacks going forward.
How to Increase Your Business Credit Score
Whether your business is new and still building credit for the first time or you’ve been in business for a while and could use a boost in your business credit score, here are a few tips for staying on track:
1. Monitor Your Score Regularly
As a business owner, there’s no question that you’re busy. Still, you should make it a habit and priority to check your business credit score on a regular basis. You can obtain a credit report from one of the three major business credit bureaus:
- Dun & Bradstreet
Some companies, like Experian, let you perform a free business search to see where your business stands, which is a great way to stay on top of how your score is tracking over time.
Of course, just knowing your score won’t be enough to improve your business credit on its own, but it can help you catch negative factors—or even mistakes with your report—early.
2. Pay Your Bills on Time, Every Time
Your payment history is one of the factors with the greatest impact on your credit score. Keep yourself in good standing by regularly paying your bills on time and making sure never to miss a payment. This is especially important if your business is new—you’re starting off with a clean slate, which can be an advantage but may also mean that missteps early on can set you back more dramatically since you have a limited credit history.
To ensure that you pay your bills in a timely manner every month, it might help to implement electronic invoices or automate your payments with software solutions, including Bluevine Bill Pay. Plus, additional capabilities—such as paying your business bills with a credit card—can further contribute to building up your credit score while taking care of routine expenses and bills. Leaning on the right business banking solutions can help you avoid making these kinds of mistakes, thus preserving your credit score.
Did you know?
A Bluevine Business Line of Credit can actually help your business build its credit score? In addition to having no prepayment penalties, our Business Line of Credit comes with the benefit of reporting positive payment history to business credit bureaus. That means that regularly utilizing and paying down your revolving credit balance can help your business operate and set you up for a brighter future.
3. Reduce Your Credit Usage
Another factor that can drive a dip in your business credit score is using a large percentage of your revolving credit each month. In many cases, that could be any percentage above 25% to 30% of your overall credit limit.
Understandably, though, it’s not always easy to keep your credit usage to a minimum, especially if you are strategically using something like your business line of credit to fuel your business’s growth at important stages. To the extent that you can, try to keep your balance as low as possible making multiple payments throughout the month to pay down your balance when you can. This can help prevent your balance from creeping above the 30% threshold month over month, thus helping you manage your debt over time.
Keep in mind, this is another great example of why something like a business line of credit is best used when you have a strategy for timely repayment in place, versus leaning on a line of credit when you’re in a bind. While a revolving credit line can help you weather the storm at times when cash flow is tight, it’s wise to look down the road and understand how your ability to pay down your balance—and your timeline for doing so—will impact you in the long run.
4. Increase Your Credit Limit
Some business owners may struggle to stay significantly below their monthly credit limit. If that sounds familiar, consider asking your credit card provider or banking institution to increase that limit. Assuming that you have a strong credit and payment history overall, lenders might look favorably on your business and offer a higher credit line to better support your growing business.
A higher credit line will allow you to spend a bit more freely without worrying about driving your credit usage percentage too high in relation to your limit. Not only will this help keep you from negatively impacting your business credit score, but it will better position you and your business to take the next step towards greater growth
5. Be Patient
Perhaps one of the best pieces of advice we can offer? Be patient. It can take a while to establish yourself as a business, and it can take longer to improve your business credit score, whether you’re just starting to build your history or are looking to get back on track.
If you find yourself faced with less-than-ideal credit, double-check your credit score for errors, then work through our tips to try to increase your business credit score and get back in the game.