Getting ready to apply for a small business loan or equipment leasing? Make your application as strong as possible by taking a few proactive steps on your business credit score. Here are four simple steps you can start working on today.
1. Know Where Your Business Credit Score Stands
You can’t boost your business credit score if you don’t even know what it is, so order your reports from the major bureaus before taking any action. The three biggest business credit agencies are Dunn & Bradstreet, Equifax, and Experian. It’s well worth the cost of accessing your reports because this is what lenders see when considering your loan or equipment leasing application. This information can also inform your next steps toward improving your score.
2. Clear Up Credit Errors
After you access your business credit reports, check each one for accuracy. If you see a negative item that is incorrect, you need to file a dispute to get it removed. It can take several weeks to complete this process from start to finish, so keep this timeline in mind if you plan on applying for any type of financing in the near future.
3. Lower Your Debt
For a quick jump in your business credit score, lower your overall credit utilization. There are a couple different ways to do this. The easiest, if possible, is to simply pay down some of your balances, particularly on business credit cards. You can also ask your creditors to increase your credit line. This isn’t so you can spend more money; instead, it lowers your utilization ratio because you have a larger line of credit available. If you regularly pay your bills on time, this is often an easy ask.
4. Make On-Time Bill Payments
This one takes a little longer but can have a huge impact on your business credit score. Make sure you pay all your bills on time, especially those that report payments such as credit cards and loans. Just like your personal credit, your business credit is largely influenced by how positive your payment history is since lenders use it to determine how likely you are to repay the loan or lease.
It may take a bit of time and effort to execute these steps, but you’ll see the positive results pay off for your business in both the short term and long term. Better credit means better financing, so it’s important to strategize the best way to improve your score.