How to Improve Your Business Credit Score
Credit scoring is vital to the growth of any business, from winning new contracts, securing additional borrowing, to getting better deals from suppliers. More than half of small businesses (60 percent) are struggling to access goods and services for their business due to having a poor credit score. It is therefore, important to understand how to improve your business credit score.
In a national survey of Small to Medium Enterprises (SMEs), business owners said the perception that small and micro businesses have poor credit ratings or could be a risk, is leading to them being charged higher rates. A staggering 71 percent of these businesses said they had been hit with unexpected terms and conditions, such are higher rates or inflexible payment options while almost half have been asked to make large upfront payments for their supplies.
10 Tips to Improve your Business Credit Score:
- Make a concerted effort to pay all your bills on time. A negative record of paying on time can indicate a poor cash position.
- Limit your credit usage and keep debt low. However, you should use some credit to create a history.
- Regularly check your business credit score by using online tools to view your credit report and correct any mistakes immediately.
- Register your business with a credit reference agency or directory to make sure there is a record of your business. If your business falls below the radar then you could struggle for credit and other services.
- Take time out every so often to check the credit position of your suppliers to protect yourself should something happened to them.
- Avoid closing down accounts when paid off.
- If you own a start-up business, keep a close eye on your personal finances. If financial information about your business is not available, your personal data could be used as an indicator of the company’s commercial integrity.
- Avoid County Court Judgements where possible, but if one does occur make sure it’s paid off within the month.
- File annual returns and financial accounts on time. Late filing can be a sign of financial distress.
- Consider taking on a partner with a good history of running businesses and a good credit score. This can not only boost your credit rating, but increases the chances of your business being successful.
