Whether you want to purchase a new property or finance some new equipment, you know that a good credit score means more favorable loan conditions. If your business’s score isn’t where you would like it to be, you can work to turn things around. Here are three ways to improve your business’s credit rating.
1. Reduce Your Credit-to-Debt Income Ratio
A significant factor that credit bureaus use to determine your score is your credit-to-debt income ratio. The ideal percentage to stay under is 15%. If your ratio is higher than that, you could be seen as a risk, and your score could go up. You can reduce your ratio by:
- Requesting an increase in your credit limit
- Paying off your balances
- Decrease your spending
- Open new accounts
Paying your debt multiple times a month can help keep your ratio down because the balances will never get too high.
2. Apply for More Credit
Getting more credit when trying to fix your score might seem counterintuitive, but more open accounts can often positively impact your credit rating. More credit means you automatically have a higher credit-to-debt income ratio, and positive payment accounts can boost your score. It’s important to remember that even though you have more credit, you want to avoid using it. You’re getting the extra credit simply to boost your score.
3. Monitor Your Report
When you want to improve your credit score, you need to know what it is. You can request a free credit report once a year from any of the main credit bureaus. There are also online services you can use to obtain your report. Once you have your report, look at it carefully. Look over all of your accounts and verify that you know about all of them. Errors on reports are known to happen, so you could find that an error has negatively affected your score. If you find any issues, immediately dispute the problem with the credit bureaus.
4. Add Positive Payment Experiences
Not all vendors and suppliers share your payment history with the credit bureaus. If you don’t see all of your accounts on your credit report, then contact the credit bureau to add trade references to your business’s report. The more positive payment experiences you have on your report, the better your score will be.
A good credit score is a must for business owners. When you know what steps to take, you’ll find your score will go up in no time.