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5 Tips to Improve Your Business Credit Score

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Most people have a decent understanding of their personal credit score, but not as many are familiar with their business credit scores. Your business credit score is crucial to determine if your business is able to borrow, how much interest you will pay on credit and in some cases if other companies will want to deal with you.

There are many ways to check your company's credit score, which is a very good idea if you've never tried to do it before. In this article, we will highlight 5 important ways that your business can improve and preserve its credit score. Your business will certainly need a decent credit score if you plan to apply for credit cards, loans or borrow from sources outside its name.

Will your heart and mind grow quickly and gently over the next few years? Check out these tips to learn how to keep your score in excellent condition. Let's start with:

1. Business credit cards

One of the fastest ways to achieve a higher credit score for your business is to use a secure business credit card. These cards are "secure" with a deposit that you will have to pay to reach them. They are suitable for those who have a less favorable credit score, but can comfortably pay the deposit.

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You can expect most deposits in the UK to be between 400 and 600 pounds. In many cases, the issuers of these cards will only want to offer them to business owners who have been working for a while, so this might not be a viable option for you if you just started trading.

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Once you have one of these cards, the goal is to never exceed 10% of your limit and make the repayments quickly. This behavior should result in a steady increase in your company's credit score.

You do not have the money to pay such a deposit? You can also take a look at "prepaid" cards, which are also sometimes called "credit cards". Unlike secured cards, prepaid credit cards often have a lower deposit amount and are better suited for business owners with below average personal credit scores. Have a store for cards like this to get the ball on improving your business credit score right away.

2. Make sure your business accounts are in good condition

Running a limited liability company? Then, your company's accounts will be deposited each year at Companies House. Many leading credit bureaus scour the accounts of limited liability companies to help them establish their scores. So, one of the things you can do right now is to make sure your business manages its accounts as favorably as possible. This means depositing complete accounts rather than abbreviated accounts and handing over your accounts to Companies House well before the deadline.

If you or someone who takes care of your accounts usually get your accounts at Companies House just in time, the processing time could mean that they end up be submitted after the deadline. In the eyes of credit agencies, this can be classified as being late, which can lead to a drop in score. Prevent this from happening by completing and sending your accounts well before the deadline!

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3. Make payments on time

It's a bit of a brainer, but it can make all the difference. If your business already has a credit, pay it back quickly and consistently. Your business credit score, about the same as your personal credit score, will increase as you behave in a way that attracts lenders and shows them that you are responsible for the credit.

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4. Try income-based financing

Revenue-based financing is a type of credit when the lender accepts conditions based on the performance of your company's earnings. It will suit those who have a booming business that has achieved good sales but that has a credit score of about 500 to 600. This can be an effective way for a business performing well to achieve excellent credit levels before applying for larger loans. ]

Compared to a traditional bank loan, income-based loans can usually be agreed and processed much more quickly, as the lender can clearly access your bank account details to see proof of your sales to clients of the bank. credit card.

5. B2B Credit

We often speak of "commercial financing". It is essentially a case where your company receives credit from another company. In most cases, these are short – term loans agreed upon for a period of less than one month. Taking one of them and ensuring you pay back quickly can be an effective way to improve your credit score quickly.

As with any other type of loan from a private entity, you should always check your creditors before agreeing to terms with them. The last thing you want is to damage your score or get in trouble by entering into credit agreements with non-credible providers.

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