If your business credit scores are good, you can have better access to financing at low-interest rates, be able to negotiate favorable terms with vendors, and have the ability to more easily take advantage of growth opportunities. However, if your credit score becomes damaged, whether, through poor decision-making or bad luck, you must repair it as quickly as possible. Here are some tips to help you accomplish this.
Pay Your Bills Diligently
One of the most important steps to take in improving your business credit score is resolving always to pay your bills on time or even early. To make it easier to expediently pay vendors, utilities, and other bills, set up calendar notifications or automatic recurring payments at your bank.
Keep Your Credit Utilization Ratio Low
Credit utilization ratio refers to the percentage of credit available to you that you are currently using. You should never use more than 30 percent of your business’s total revolving credit. To improve your credit utilization ratio, ask your creditors if you can increase your credit limit, but do not use this higher limit to accumulate more debt. Keep in mind that closing unused credit cards does not improve your credit score. Keep them open so that your credit utilization ratio stays low.
Negotiate with Creditors
If you are having difficulty paying your vendors and other creditors, negotiate with them to work out more favorable options for repayment. If you demonstrate good faith in your efforts to repay your debts, they will probably be willing to work with you to come to a mutually beneficial agreement. Through these negotiations, you may even get negative entries in your credit report expunged.
Request Trade References
Some of the vendors you work with may not report your payment details to credit bureaus. According to the U.S. Small Business Administration, though, these vendors can still help to improve your credit score if they provide the bureaus with favorable trade references.
For more advice on improving your business credit score, contact Commercial One Group.