Your business credit score is just as important as your personal credit score. It can affect your ability to get loans, leases, and lines of credit, as well as your insurance rates. A good business credit score can save you money and give you more flexibility in running your business.
There are three major credit bureaus that track business credit scores: Experian, Equifax, and TransUnion. Each bureau has its own scoring model, but they all use similar factors to calculate your score. These factors include:
- Payment history: This is the most important factor in determining your business credit score. Make sure you pay your bills on time, in full, every month.
- Amounts owed: The amount of debt you have outstanding can also affect your score. Try to keep your debt-to-credit ratio below 30%.
- Credit history length: The longer your credit history, the better. If you have a short credit history, you may need to start by building some credit with a business credit card.
- Inquiries: Too many hard inquiries on your credit report can lower your score. Only apply for credit when you really need it.
You can get your business credit score for free from each of the three major credit bureaus. Once you have your score, you can work to improve it by paying your bills on time, keeping your debt low, and building a long credit history.
A good business credit score can give you a competitive edge in the marketplace. It can help you get the financing you need to grow your business, and it can save you money on insurance premiums. So make sure you take steps to build and maintain a good business credit score.
Here are some additional tips for improving your business credit score:
- Open a business credit card and use it for everyday expenses. Pay the bill in full each month to avoid interest charges.
- Get a business loan or line of credit and make all payments on time.
- Negotiate lower interest rates on your business loans and credit cards.
- Pay down your business debt as quickly as possible.
- Dispute any inaccurate information on your business credit report.
By following these tips, you can improve your business credit score and get the financing you need to grow your business.