After you open a business, your company’s credit score is going to be vital to your success in the coming years. That is why it is so important for you to do everything in your power to boost your business credit score as you continue to expand.
Start With Your Bills
Paying your business’s bills on time is one of the easiest and most effective ways to build your business credit. Whenever a loan officer takes a look at your company’s credit history, they will most likely go over your monthly bills first. If they see missed or late payments, then your credit score could drop. Small business owners who feel overwhelmed with monthly bills should consider setting up automatic payments or hiring a financial professional to take care of them for you.
Lower Your Credit Utilization Ratio
Another step that you can take to improve your company’s credit score is minimizing your credit utilization ratio. When you have used too much of your available credit, it is going to negatively impact your credit score. Every situation is slightly different, but it’s generally agreed that businesses should never use more than 30 percent of their available credit, and using less than 10 percent is ideal. For those that happen to go over the 30 percent threshold, the number one priority should be paying off the balances as quickly as possible.
Dispute Any Errors You Find
At least once or twice a month, you should carefully go over all of your expenses and credit accounts. If you notice any errors, then you need to dispute them immediately. An unnoticed error could cause your company’s credit score to drop by a significant amount in a very short period of time, and rebuilding your credit is going to be a long and arduous process.
Work With a Financial Manager
While you can carry out many of these steps on your own, there might come a point when you need to work with a financial management company. One of those companies will be able to offer you advice, train your employees, and work with you on business financial management systems. They can help you come up with a long-term plan for improving your company’s credit in a consistent manner.
Even if you are able to build up a surplus of cash with your business, you still want to ensure that you have a solid credit score. Your company’s credit score is going to have a big impact on additional loans, expansion opportunities, terms from new suppliers, and a wide variety of other variables that will impact your small business’s future success.