Your credit score is a significant number that can affect how you can borrow money, get a job and rent an apartment. Since it’s such an integral part of your financial life, it’s essential to ensure that the information on your credit report is accurate and up-to-date. Here are some tips for improving your business credit score or at least managing to apply for small business loans with bad credit:
Utilize the full extent of your credit limit.
The second tip is to utilize the full extent of your credit limit. You may feel like you’ll be overusing your card if you use the maximum amount of money available on a credit card, but don’t worry: that’s not the case.
In fact, not worrying about overusing your card is actually a great idea! By taking full advantage of all the funds available in terms of payments made and interest rates charged, you’ll be able to ensure that your business stays profitable and receives high marks for its creditworthiness.
Pay on time and in full.
Paying your bills on time is one of the most important things you can do to improve your business credit score. This means paying off credit cards in full each month and paying all other bills on time. It’s also important to avoid late payments and overspending.
If you have a legitimate reason for missing a payment, contact the creditor immediately and explain why it happened. For example, let them know if you have been transitioning from an individual credit card to a small business credit card and forgot about the change initially.
They’ll understand that it was an honest mistake! If there isn’t any good reason for missing a payment or making late payments, then work harder at staying organized and paying bills on time, so this doesn’t happen again.
Don’t go moving around all willy-nilly.
The easiest way to improve your business credit score is to keep it from declining in the first place. And the best way to do that is by keeping an eye on your accounts. Don’t open and close accounts frequently, for example, because it will make it look like you’re desperate for cash or play-acting at being a good citizen when you’re not.
And don’t let any of them fall into delinquency because they’ll go into collections, which means they’ll stay on your report forever or at least until they’re paid off. And don’t close any accounts without canceling them first, so the creditor doesn’t think you’re trying to dodge their calls!
Establish business accounts early.
Establishing credit early is a great way to build your business credit score. Don’t wait until you need a loan to start establishing credit. Open up accounts, such as credit cards and car loans, that will help build your score over time. A mortgage is another example of an account that can help build your business credit score.
“Before you start to apply for unsecured startup business loans, it can help to do some prep work to strengthen your pitch. Even with bad credit, you can present an in-depth business plan outlining your success strategies and how you plan to use the funding, says Lantern by SoFi experts.
Many tips can help you improve your business credit score, but the most important thing is to be consistent. If you consistently pay your bills on time and try to keep your balances low, your credit score will likely improve over time.