What Steps Can I Take to Improve My Business Credit Score?

Ann Marie Smith

Oct 18, 2021

Your business credit score is an important measure of your financial health. If you own or operate a business and if you have borrowed money, bought supplies on credit, or extended credit to a customer, there is almost certainly information about your business stored in the databases of the business credit reporting bureaus.

You can check your business credit score from any of the business credit reporting agencies at any time using the self-service portal at Command Credit. Dun & Bradstreet, Equifax, and Experian all provide different types of business credit reports, and you can see all of them at Command Credit.

If your business credit score is less than spectacular or you want to improve your business credit score, there are proactive steps you can take to make it happen. First, we need to answer the question: What is my business credit score?

What Is My Business Credit Score?

Your business credit score is an assessment of your creditworthiness based on your credit history.

Your business credit score is what lenders will check if you apply for a loan or ask for credit with one of your suppliers or vendors. A good credit score can help you negotiate better financing terms, higher credit limits, and may even reduce the amount you pay on your insurance.

It is important to check your business credit report regularly to make sure there are no errors or potential warning signs of fraud, such as someone trying to establish credit under your business name. If you are thinking of applying for a loan or taking out a line of credit, it is also a good idea to check your business credit score in case there are areas you need to improve.

Steps to Improve Your Business Credit Score

Just like a personal credit score, the higher a business credit score, the more likely you are to get credit, lower interest rates, and better terms. If you want to improve your business credit score, there are some tried-and-true steps you can take to attain and maintain a good score.

The most important thing you need to do is pay your bills on time.

Pay Your Bills Promptly

When someone looks at your business credit score, they are trying to determine whether you are a good credit risk and pay your bills on time. One of the best things you can do to maintain a good business credit score is pay your bills on time or before they are due.

Missed or late payments may indicate financial stress, so if bills are not paid on time, your business credit score will drop.

If you want to improve your Dun & Bradstreet credit score, the D&B PAYDEX score awards more points for businesses that pay their bills 30 days or more before they are due.

Keep Credit Utilization in Check

Using credit responsibly boosts your business credit score. For example, making regular on-time payments on a business loan shows you honor your obligations. The same applies to business credit cards or lines of credit.

To maintain a good credit rating, establish credit and keep your utilization low. In other words, have credit but do not overextend yourself. Using more than 30% of your available credit may negatively affect your score. Experts recommend keeping credit utilization in the 10-15% range, if possible.

You can improve the ratio of credit used in relation to the amount of credit available in several ways, including:

  • Paying off any outstanding balances or paying down debt as low as possible
  • Decreasing credit card spending for new debt
  • Asking business credit card providers to increase your credit limit
  • Paying bills more often than once a month to reduce the amount of debt you carry at any one time

You can also reduce your credit utilization by opening up new lines of credit. The key is to have more available credit, but you only reduce your utilization if you do not use all of it.

Use Trade Credit Responsibly

Tradelines are an important factor in determining business credit scores. Not only will paying bills on time help your score, but it also helps develop important business relationships and protect your supply chain.

Establishing credit with supplies and paying your bills on time will also add positive payments to your credit file and increase the odds of getting a good credit score.

If your suppliers or vendors do not report their payment data with the business credit reporting bureaus, you can manually add trade references to your credit file through the credit bureaus. This helps establish positive experiences.

Eliminate Errors

Mistakes do happen. If there is erroneous information on your business credit report, you need to correct it as quickly as possible. If something is incorrect, call the credit reporting agency to dispute it.

Checking your business credit report frequently can help you spot errors before they cause credit problems. It is also a good way to detect fraud, such as hard credit inquiries made by others, which can negatively impact your business credit score.

Ready to check your credit report and see how you can improve your business credit score? Check out the self-service business credit reports at Command Credit today.