Small Business Credit: 5 Ways to Improve It
Establishing your small business’s credit history is imperative to the growth of your business. Signing up for your business checking accounts and credit cards is an important first step in building good credit. However, you may need to do more in order to bring your business credit score up to a level that will be beneficial to your overall growth. Consider these 5 tips as you seek to improve your business credit score. **1. Analyze Your Credit Report** Once you have established a credit history for your business that is separate from your personal credit, you should check your report regularly – and not just the numerical score. Make sure the information in your report is updated with your current business location, number of employees, and in-progress lawsuits or liens; if you’ve dealt with any money issues as of late, be sure to check back to ensure everything is still in order. All of these seemingly minor details can have an effect on your business credit, especially if there are mistakes. **2. Pay Your Bills on Time** This one is a no-brainer – but it’s also the easiest way to increase (or decrease) your credit score. Pay your bills on time every month; this includes not only your credit card payments, but also rent, utilities, and other vendors who consistently report late or delinquent accounts to credit reporting agencies. If your monthly payment schedule is awkward – such as bill due dates spread unevenly across the month - you can negotiate to change your due dates to make it easier for you to pay on time. Take care not to overextend yourself by signing up for more payments than your business can handle each month. **3. Monitor and Prevent Fraud** According to the US Small Business Administration, fraudulent activity causes 15% to 30% of all commercial credit losses.
- Place a fraud alert on your credit report with each credit bureau. These alerts will immediately inform you if someone is using your business information to fraudulently access your accounts or credit.
- Put internal controls in place within your business that limits who has access to your credit accounts. U.S. businesses can lose up to 7% of their annual revenues to employee theft or fraud. Losses due to employee theft can damage your credit as well as your bottom line.
- Check with all of your vendors, suppliers, and financial institutions to make sure that they are reporting your payments regularly. The more you fill your credit report with positive, accurate information, the more your credit score will improve.
- One quick way to improve your balance ratio is to request a credit line increase. This immediately lowers the percentage of credit that is currently being used. However, if your request is denied, that denial can ping your credit score as well.
blog comments powered by Disqus