Increase Credit Score
Your business credit score is more than a number. In fact, it can play a large role in the success of your business. A business’s credit score helps lenders, suppliers, and other creditors quickly evaluate whether the business will pay its bills on time.
But understanding the importance of business credit is only half the battle. Once you know your score, you’ll want to improve it. there are a few steps you can take to ensure that your business credit report reflects the best possible score for your situation.
- Check your business credit report regularly and verify that the information is accurate and up-to-date.
- Establish business credit with companies that report trades. Remember, not all business creditors report their trade information.
- Pay your creditors on time. Historical payment behavior with previous creditors plays a major role in determining your business credit score.
- Check your credit report.
- Pay your bills on time.
- Decrease your credit utilization ratio.
- Establish credit accounts with suppliers.
- Add positive payment experiences to your credit file.
- Dispute any errors and inquiries.
- “Pay for delete” with collections.
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Understanding Increasing Credit Score
A business credit score is similar to a personal credit score, such as your FICO score, which is the most popular credit scoring model.
Just as a FICO score measures your personal creditworthiness, your business credit score is a numeric representation of your company’s creditworthiness. The information on your business credit report is used to produce the score, and business lenders use it when they’re considering your credit application to predict how likely you are to pay them back in a timely fashion. A higher score means your business has a history of paying bills on time.
Unlike Dun & Bradstreet, Experian or Equifax, FICCO technically isn’t a credit bureau. Instead, the FICO credit score comes from information that the three major credit bureaus have already gathered.
The FICO score is also known as the LiquidCredit Small Business Scoring Service (SBSS). Banks and lenders typically use it when making decisions on the approval of Small Business Administration (SBA) loans and other similar credit applications for amounts up to $1 million.
The FICO score comes from data on the business’ and owner’s personal credit history alongside other information such as the revenue, assets, and age of the company. FICO will assign a score of between 0 to 300. The higher the score, the lower the financial risk the business poses. Many lenders set a minimum FICO SBBS credit score of 160 to pass the SBA’s pre-screen process.