4 Best Practices To Achieve A Good Business Credit Score

There are many good reasons why business owners should strive hard to have a good business credit score. Having one means that you can be trusted to pay your debts on time, so you can have more and better opportunities to work with others. You can also get more and better business loan options and receive approval faster.

What should you do to build a good business credit score? How do you increase your currently low business credit score?

1.    Check your credit report regularly.

A business credit report contains essential information about a business. It includes details about the ownership, finances, subsidiaries, risk scores, liens, bankruptcies, and others, and can be obtained from credit reporting companies, such as Experian, Equifax, and Dun & Bradstreet. For example, if you want a copy of your Experian business credit report to know your Experian business credit score and other key business information, you can just go to their website. You should be able to obtain a copy of your Experian business credit report indicating your Experian business credit score and other pertinent data for free if you sign up for a free account.

2.    Make sure that you pay your bills on time.

One of the factors that can influence your business credit score is your historical payment behavior. If you do not settle your bills on time, your business credit score will be negatively impacted. It will go lower and lower until you start paying your debts on time. To achieve a high credit score, you should always be punctual with your payments to eliminate your debt risk and other red flags.

3.    Lower your credit utilization rate.

According to experts, maintaining a credit utilization rate of 30% or less is ideal to achieve a good business credit score. It is calculated by dividing your total debt by your total available credit. So, for example, if your total credit debt is $7,000 and you have $10,000 of available credit, your credit utilization rate is 70%. This is a bad thing because you are way above 30%, which is the maximum number classified as a good credit utilization rate. If, for example, your total credit debt is $20,000 and your total available credit is $83,000, your credit utilization rate is 24%. This means you are doing things right as it is under 30% and within the good credit utilization rate range.

4.    Get a business credit card.

When making business purchases, you should not rely on your personal credit card. Using the same credit card that you use for paying your house utility bills and groceries to buy office supplies and equipment or to pay your commercial space rent makes it difficult to track your business finances and could make doing your taxes challenging. It also fails to keep your personal life and business life separate, which could potentially cause some legal issues. It does not help you build your business credit score either. With a business credit card, you have something to use only for your business expenses, so you can protect your personal credit score and activities while also building and improving your business credit score for your business growth and expansion.

Source: https://www.tillful.com/card/
Address: 44 Tehama St, San Francisco, CA
Zipcode: 94105