Boosting Your Small Business Credit Score: Proven Tactics

People assume that small businesses simply worry about day-to-day operations and either keeping their profit margins intact or increasing them by a small percentage every year.  However, most small business owners are highly ambitious and target long-term growth. However, to be able to achieve long-term growth, one must have access to credit. Money is needed to hire new people, buy tech and machinery and take risks, in general. Small businesses looking to avail of credit must maintain a high credit score. If your business' credit score is low, read on. Here, we discuss simple ways to improve a small business credit score. 

Simple Tips on How to Improve a Small Business Credit Score 

Check Your Business' Credit Report Regularly and Report Any Discrepancies Immediately 

Credit information agencies assign credit scores based on the information collected from banks, NBFCs, credit card companies and other financial institutions. These institutions maintain records on millions of individuals. Thus, sometimes, wrong information gets passed, which leads to an individual or business having a low credit score. Thus, companies must check their credit reports regularly and report any mistakes they see immediately. 

Never Borrow in Your Name and Never Close Old Loan Accounts 

When it comes to a business credit score, business owners make two mistakes that cause their company's credit score to go down. First, many business owners avail of credit on their name. Thus, when they repay credit without defaulting and responsibly, it is not their business' credit score that improves but their own. So, all business owners must maintain a separate account for their business and use this account only for business purposes. 

Further, the age of one's credit history also has a direct impact on their credit score. The same goes for business credit scores. So, if you have a business account and you have availed yourself of a loan for your business that you have successfully repaid, do not make the mistake of closing your loan account. Closing the loan account will cause your loan history to get deleted, which in turn, will hurt your credit score. So, always maintain old loan accounts. 

Maintain a Clean Repayment History 

The repayment history is the one factor that impacts a business' credit score the most. If you want to build a strong small business credit score, get into the habit of paying all your business bills on time. Set up reminders or authorize your bank to make payments on your behalf. This will help you build a strong small business credit score for sure. 

Maintain a Low Credit Utilization Ratio 

The credit utilization ratio is the ratio of credit used to credit available. All businesses have credit cards that they use for day-to-day transactions. The way a business uses its credit card also plays a key role in determining its credit score. Businesses that maintain a low credit utilization ratio have a higher credit score as such businesses are not extremely dependent on credit. On the other hand, businesses that have a high credit utilization ratio have a low credit score. So, all businesses must try their best to maintain a low credit utilization ratio on all their credit cards. 

These are some simple tips that will most certainly help you build your small business credit score and avail of a loan easily and on the best possible loan terms and conditions.