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Jun 15, 2021
3 min read
Last update: May 16, 2024

Improve Your Business Credit in 5 Easy Steps

A business credit score is just like a personal credit score, but for your company. It takes time to build up, so make sure that you have done the following to get your business started on climbing the ladder of credit:

  • Incorporated or established your business as a separate entity
  • Obtained an EIN
  • Created a bank account for your business
  • Created business phone number, address, and/or website
  • Registered with credit reporting agencies
  • Applied for a business credit card to start building your company’s credit history and/or applied for accounts with vendors or suppliers who report to credit bureaus.

How Can You Improve Your Business Credit Score?

Here are 5 easy steps to improving your business credit score:

  • Step 1: Separate Your Personal and Business Expenses

Keeping your personal finances separate from business finances is crucial in building up credit for your company. Your business should run as its own entity, with a clear financial separation from you as an individual. This separation will also benefit you legally and when filing your taxes.

  • Step 2: Pay Bills and Other Expenses Early

Paying your business expenses on time is great. But paying them early is even better. It’s a great way to improve your business credit since credit reporting agencies give a higher score to companies who submit early payments. Paying your bills early demonstrates that your company is responsible and capable of spending within its means. Making late payments and having unpaid outstanding bills will damage your credit rating and thereby lower your credit limit.

  • Step 3: Monitor Your Credit Score

It’s a good idea to get a business credit report done at least once or twice per year to get a snapshot of your creditworthiness and to look for any possible problems, outdated information, or discrepancies that should be addressed. You’ll get insight into areas where you can improve which can help you identify a plan to work towards bettering your credit score. Some of the most common business credit reporting agencies that can create a report for your business are Dun & Bradstreet, Experian, and Equifax.

  • Step 4: Pay Down Any Outstanding Balances on Credit Cards and Accounts

If you have a high credit utilization ratio, meaning the total amount of outstanding debt you are currently using in relation to the total amount of credit you have been approved for, then your business credit score will undoubtedly take quite a hit. It signals that you may be overextending yourself, so try to only use what you need and always pay off what you can. This will keep your debt low and your credit rating high.

  • Step 5: Don’t Close Credit Accounts That You May Not Be Using

Although you may not be using a credit account, resist the urge to close it down entirely. Keeping existing credit accounts open is important because they help keep your credit utilization ratio down. In addition, an older account increases your creditworthiness because as the account ages, your score goes up.

Why is Having a Good Business Credit Score Important?

Having a high credit score comes with the following benefits:

  • Better terms when you use new vendors or suppliers
  • Higher amount of credit a vendor or supplier will extend your business
  • Lower interest rates and terms on credit cards from banks and lending agencies
  • Positive reputation with customers and other businesses
  • Better insurance premiums.

Final Thoughts

Too often, small business owners sacrifice growth and opportunity because they are shut out by big lending companies or are overwhelmed by where to start. Unlike typical lending institutions, SBG Funding is efficient in helping you access financing that is not limited by the same time-consuming, stringent regulations as traditional banks. Our small business term loans or business lines of credit can help you establish and improve your business credit. 

For more information about how we can help your business, click here.

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