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Your credit score is one of the many numbers that can have a direct impact on whether or not your business will succeed for the next five years. This includes both your personal credit score and the credit score of your business, both of which need to be cultivated if you want to boost the amount of credit you have available.
And that’s a good goal to have in mind. After all, easy access to credit allows you to be more flexible. Credit allows you to make big purchases on short notice and make investments that will boost your profits in the long run. Here’s how you can build the credit score of your small business.
1 - Cover the basics
The first thing you want to make sure of is that you have covered your bases when it comes to the credit score of your business. And the best way to do that is to take a look at your own company’s credit record. This will let you spot flaws, such as missing payments, or bills that you paid with your personal card instead of your business one.
Clerical and automation errors in credit reports aren’t that common, but they can be catastrophic when they do happen. And that’s another reason why you should check those reports yourself — as the one who is most familiar with the finances of your business, you’ll have an easy time spotting details that appear out of place.
While personal credit reports can be obtained for free, you may be asked to sign up for a paid subscription in order to see your business credit report.
2 - Limit your credit applications
Applying for several different lines of credit in a short period of time does not look good in a credit report. It can bring your credit score down, as the automated systems understand this as a sign that your business is struggling financially. If you want to have many sources of credit available — and it’s often a good idea to do so — make sure you spread out your applications to prevent this problem.
3 - Pay your bills on time
You’ll gain points on your credit score if you are reliably paying your bills on time — pay them early, if you can. This goes for both your business bills and your personal ones. Some credit score companies don’t look at the company owner’s personal credit when they put together their reports — but many companies do.
4 - Keep your credit use low
Companies like to see that you are using less than 30% of your available credit at all times, so keep to that threshold if possible. Of course, the realities of running a business — especially a small one — make that hard to achieve. But it’s still good to keep that principle in mind: the less credit you need to use, the better.
While having a good credit score is good, having a bad one is not the end of the world. Services like 1stukmortgages.co.uk can help you if you have a bad score and are looking for a loan.
This content is provided by an external author without editing by Finextra. It expresses the views and opinions of the author.
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