7 ways to improve a low business credit score


If you are an entrepreneur going it alone, you will need to consider funding. Whereas the goal may be to grow your business and make profits, building business credit should top the list. A good business credit score can play a vital role in making your journey as a sole proprietor a smooth one as well as help you realize all the other goals you may have. When you think of business credit, money is the anchor. However, you can also think of supplies and equipment that you may need but cannot pay upfront. Importantly, building your business credit is one crucial obligation that you have towards your investors, credit card companies, and lenders. So it is worth it to find companies that help build business credit as the business credit report is what they look at when deciding to lend you money. Therefore, to qualify for any loans, you must have good business credit, but what do you do when you have a low business credit score? In this article, you will learn ways to improve a low business credit score.

1.Get a company credit card

Even if you are a sole proprietor, it is necessary to separate yourself from the business. Thus, apply for a business card with a low credit limit that you can pay off. Be sure to run it as you pay for things each month and then settle the outstanding balance off. The tip is to get it quite active for at least a year. Then, you can ask the bank to increase the credit limit on the card. Why this is important is, even if you don’t get the increase, you are likely to have built on your business creditworthiness. This reputation is one way to improve your credit score as well as help in qualifying your business for credit elsewhere. 

2.Establish Trade lines

Trade lines will help keep track of the activities between creditors and your business. Importantly, trade lines contain account data, such as the date of credit issued and the payment history. It is these reports that contribute to your credit profile where lenders refer to before extending any loans to your business. However, you could have a business credit report without any trade lines. But, this will affect your creditworthiness. So, you can ask every vendor to report your payment activity. In this way, you can boost your low business credit score.

3.Get a business credit report

Business credit reporting agencies are responsible for your credit report. Therefore, find out if your business exists on their radar. Also, work with lenders who report their accounts to the bureaus to increase your chances of qualifying for credit. In the report, you will find out your credit score and know the status making it easier for you to improve it if it is too low. Additionally, your score will then guide you on how you should relate with your creditors. For example, you can start making payments on time. To get entries from your lenders that affect your business positively. Therefore, improving your credit score and staying on top of your report is a crucial part of growing your business.

4.Review of vendor reporting

It is highly likely that you agree with some vendors to pick and pay at a later date. However, do they all report to the credit bureaus? The credit report should guide you on this even though there are no listings of company names but, the activity on it will reveal a thing. Please note that companies are not required to report to credit agencies. Therefore, some will and others will not. Although you need to find out whether your credit behaviour is working to your advantage in helping build on your business credit. If not, you can change to vendors who will report to a credit bureau. 

5.Build a relationship with your bank

As a business owner, you are aware that money truly is the lifeline of your business. Therefore, it is necessary to cultivate a relationship with your bank. Importantly, you need to have information about the loans you can access. Also, the bank can guide you on the necessary steps in detail. All to make sure you do not miss out on any products that could help in running your business and building onto your credit score. Also, note that the longer you foster good relations with your business associates and suppliers, the more they are likely to trust you. What this means is that you will grow and have smooth operations in your business as you get to access more funding. 

6.Consolidate your debts

In case you are already in debt, consider putting all of them under one umbrella. Do this by approaching a credit company that will negotiate with your creditors on your behalf. This process of debt consolidation is to ease off the pressure of dealing with too many creditors you may owe. When thinking of going this route in the hope of debt management, make sure that you are not adding to your existing loan by getting a bigger loan to cover the rest. The agency you approach will negotiate to secure lower interest rates and time extensions, and as you pay, you improve your credit score. 

7.Create a budget

Lastly, even if you feel you may have a general idea of where the money is going and coming from, it is not enough. Budgeting is very crucial in running your business finances and managing operational costs. Additionally, a budget is a great tool that will help make a plan for how to spend your money each month. With the organization it brings, you will realize all your income from all the different sources. Although it has a record of fixed expenses like rent, as well as the variables like servicing a machine, it will reveal to you the spending habits of your business. In this way, you can save money and clear debts to help improve your credit score.

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