You might be used to regularly checking your personal credit score and you might know some ways to help bump it up. For example, if you were to take out short term loans, repaying them back on time can potentially increase your score. Maintaining your business credit can also be simple if you know what to pay attention to. Here are some simple ways you can look to maintain your business credit score.
Pay Your Bills On Time
The most important thing to help maintain your credit score is to pay any bills on time. This includes any direct debits you have come out each month, any loan repayments, and any minimum payments that need to be made on a credit card. Paying any of your bills late can negatively impact your business credit score, and missing payments regularly can have a detrimental effect. Try making your payments automated so that you don’t run the risk of missing them.
Utilise A Credit Card
A business credit card will allow you to build up your score just like you would with your personal one. If you don’t have any financing like a credit card, you can potentially worsen your credit rating. For example, if you apply for a business loan, you could be deemed too high risk to lend to as you haven’t demonstrated that you can make monthly repayments. Some businesses use a credit card to purchase things day to day and then pay it all off at the end of the month. This can help your credit score to steadily build up over time.
Only Use Your Business Account
If you want to maintain your business credit score, you need to be making payments with your business accounts. If you’re a smaller business, it might be tempting to use your personal ones for little things here and there. But, by doing this you’re only increasing your personal score so making sure you use your business accounts is essential.
Don’t Go Over Your Limit
If you choose to use a business credit card or overdraft, don’t go over your credit limit. This can cause you to end up missing repayments as it becomes more unmanageable which can hurt your credit score. Similarly, don’t try and apply for too much financing. You don’t want all of your outgoings to be going on repayments as you could end up relying on other finances to help top you back up, keeping you in a vicious circle. Being in a constant state of debt can have undesirable consequences for your credit score as well, so try focusing on one finance option at a time to keep your rating where it needs to be. Applying for too many finance options can also possibly decrease your credit score, so be mindful as to how often you’re filling out applications.
Look After Your Personal Score Too
When looking to finance your business, you may opt for a loan. Your application will be processed, and your business credit score will be thoroughly checked. However, if you don’t have a score built up yet, lenders may look at your personal score, so you want to make sure you’ve got this to a reasonable rating too. Using business finance can be a good way to increase your business credit score, but if you don’t have a score and your personal one is bad, you may get your loan application rejected. This then makes it harder for you to build up your business credit score in the long run.
Maintaining your business credit score doesn’t just happen. It takes work and awareness of what can affect it. Make sure you include its maintenance in your business strategy and that way you’ll always be on top of it.