Credit scores are very important for businesses: A low one can make obtaining financing much more difficult, while a high one can open many doors. If you’re looking for ways to improve your business’s credit score, just keep reading for five strategies.
1. Carefully Use Credit Cards
Potential lenders want to see that your business can manage credit well. To show that skill, consider carefully using business credit cards. Avoid the temptation to open more cards than you need, and be sure to keep your debt manageable.
2. Pull Your Business’s Credit Report
Businesses can check out where their credit scores stand by obtaining a credit report. As pointed out on The Balance SMB, other parties—such as lenders and suppliers—can as well, so it’s important to know what your business’s credit report says. Obtain one from the agency of your choice, scan it for errors that need to be corrected, and take note of the factors hurting your credit score.
3. Cut Expenses
Cutting expenses won’t directly raise your credit score, but it will make it easier to take other actions that can improve the score. For example, if you cut $30 a month from your expenses by switching to a cheaper phone plan, you can then put another $30 each month toward paying down existing debt.
4. Consider Invoice Factoring
Invoice factoring can allow your business to access new funds without taking on additional debt. With this financing method, your business essentially sells outstanding invoices at a slight discount in exchange for immediate cash. It can be particularly useful if your business wants to preserve a healthy credit utilization ratio.
5. Pay Bills On Time
Even if you can only make the minimum payment each month, it’s essential to pay all of your bills on time. Late payments are a surefire way to tank credit scores, no matter how strong a business is otherwise.
GP Solutions LLC’s blog is continually updated with new business advice, so stop by again soon!