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6 Tips for Improving Your Business’s Credit Score

Your business credit score is an essential indicator of the overall financial health of your organization. Figuring how to improve your credit score might seem challenging. But it can be a critical factor in the future success of your business. If you’d like to find out how to be a more creditworthy business, here’s what you need to know. 

Your Business Credit Score and Why It Matters

As a business owner, having strong business credit means that you have a positive history of paying your debts. Basically, a high credit score tells potential lenders, vendors, and business partners that you are trustworthy and pay your bills on time. 

Business credit isn’t the same as personal credit. A personal credit score can range anywhere from 300 to 800 points, with higher scores being better. A business credit score will range from 0 to 100, and most credit bureaus consider anything around 80 or higher to be good. 

How to Improve Your Business Credit Score

While there aren’t any perfect methods for boosting a business credit score, these tips can help you get the best results. 

1. Register Your Business Properly

First, you need to be a business to have a business credit score. Choose a business structure that separates your personal and business finances, such as a corporation or LLC. Get an EIN from the government and open a business bank account. 

2. Tell the Credit Bureaus About Your Business

The three main business credit bureaus are Experian, Equifax, and Dun & Bradstreet. Each allows you to review your information and even upload recent financial statements to keep your file accurate. 

3. Pay Your Bills on Time

One of the best things you can do to improve your business credit score is to pay your bills on time. Late payments can damage your score quickly. If this is a struggle, consider speaking with an accountant who can help you get organized. 

4. Open a New Business Credit Card

Opening a few business credit accounts can help you quickly build your business credit profile and boost your score. Here is a list of major credit card issuers that report to credit bureaus. 

5. Use Your Credit Wisely

Even if you have some business credit accounts, use them wisely. Your credit utilization ratio, which is the percentage of available credit you use, should be anywhere from 10% to 30%. Ideally, you should keep your balances as close to $0 as possible. 

6. Add Trade References to Your Credit File

Some credit bureaus use trade references to review your payment history with suppliers and vendors. These include information such as how you pay, any balances due, and any amounts past due. If your vendors report to a credit bureau, this can help boost your score.  

Get Comprehensive Business Accounting Services

It’s tough to maximize your business results if you have late payments or cash flow issues because of non-paying customers. You can alleviate a lot of these troubles and free up more time to run your business when you partner with an experienced accounting firm. 

At Orcutt & Company, we offer comprehensive business accounting, bookkeeping, payroll, and tax services, all under one roof. These consolidated services make it easier for you to streamline and run your business. Contact us today for more information.