How to Improve Your Business Credit Score

How to Improve Your Business Credit Score

A poor business credit score can be a big obstacle for small businesses. 

Lenders will use your credit score to decide what kind of loan to give you. Investors will look at business credit before agreeing to take a chance on your company. The score can even affect the “friendliness” of contracts with vendors, suppliers, and landlords.

There are several key benefits of a strong business credit score:  

  • It makes you look more trustworthy (and less risky) to lenders and investors.

  • It opens up more competitive loans.

  • It attracts potential investors and partners.

  • And it helps you negotiate better terms with vendors, suppliers, and lenders.

In this blog, we answer some common business credit questions and discuss how to raise and maintain a good business credit score. 


Differences between a personal and business credit

Your personal credit score and your business credit score differ in a few important ways:

  1. Credit capacity: Small businesses operate on a much larger scale than most consumers. Therefore, business owners can take out larger loans and open up more credit accounts without taking a big hit to their business credit score.

  1. Accuracy protections: While inaccuracies can pop up on either type of credit, the law offers greater protection for individual consumers. Credit bureaus aren’t required to respond to any challenges you submit to business credit scores. To correct false information, you have to be patient and persistent. 

  1. Ownership: While personal credit scores are tied to your Social Security Number (SSN), business credit scores are tied to a company’s Employer Identification Number (EIN). Therefore, your business credit is only connected with you while you are the official owner of your small business.


What impacts your business credit score?

When calculating your business credit score, credit bureaus will look at a handful of factors: 

Payment history: What are your payment habits? Do you routinely make loan or business credit card payments on-time – or even early? Have you made any late payments?  

Credit utilization: Are you using too much of your available credit all at once? How close do you get to your credit limit each month?

Business credit history: Simply put, how long have you been using business credit?

Types of business credit: What kind of business credit accounts do you have? Loans? Business credit cards? Business lines of credit?

Credit inquiries: How many “hard” credit inquiries have been made within a short time frame? How many business loans have you applied for?

Business demographics: How long have you been in business? What’s your industry? How many employees do you have on staff?

Bankruptcies, judgements, and liens: Have any judgements and/or liens been placed on your business as security for the creditors and taxing authorities? Are there any bankruptcies on record?

How to build small business credit

Whether you need to establish credit as a new local startup or give your credit a boost after years of operating your business, these steps can help you reach your credit goals:

Pay your bills on time: Stay on top of your monthly payments – to creditors, vendors, suppliers, your landlord, you name it! To ensure you don’t skip a beat, schedule automatic monthly payments.

Reduce your debt: Determine how you can reduce your balance. If you can fit it into your budget, try to pay off your loan and credit card balance early. Don’t abuse your business credit card. And when you make payments, pay them in full.

Pick the right lenders: Small business lenders don’t always report to credit bureaus. So, even if you are making all your payments on time, your loan payments may not be helping your credit score as much as they should be. If possible, try to borrow from lenders who report to the 3 major credit bureaus (Dun & Bradstreet, Experian, and Equifax). 

Open a business credit card (and use it responsibly): A strategic way to diversify your credit portfolio, using a business credit card can give your business credit score a much-needed boost. Don’t stall! Opening a credit card sooner rather than later will help your credit history.

Watch who you do business with: Choose your business relationships wisely. Vendors, partners, and even customers with bad credit can tarnish your reputation and create unnecessary roadblocks to your business goals. 

Avoid too many “hard” credit inquiries: In other words, don’t go applying for business loans far and wide like you might if you were applying for a job. Soft credit pulls – often used for loan pre-approvals and during the hiring process – are fine. But the hard credit inquiries lenders make deep into the loan application process can negatively impact your credit score.

Don’t be afraid to check your score: The best way to keep tabs on business credit is to request semi-regular credit reports. You’ll want to pull regular credit reports from all three main credit bureaus: Dun & Bradstreet, Experian, and Equifax.

Check for inaccuracies: Monitor your business credit score regularly with the big three credit bureaus (listed above). If you find any errors or your information is outdated, address it promptly. 

Be consistent: Strong credit scores don’t just appear overnight. It can take years for you to get your business credit where you want it. If you remain diligent and follow the steps listed above, you’ll get there eventually.


Fayetteville-Cumberland Regional Entrepreneur & Business HUB – Small Business Resources

Need help building your business credit?  

We have resources to help! The Fayetteville-Cumberland Regional Entrepreneur & Business HUB team offers an array of useful consultation services for small businesses in the following North Carolina counties:

  • Bladen County

  • Columbus County

  • Cumberland County

  • Harnett County

  • Hoke County

  • Moore County

  • Richmond County

  • Robeson County

  • Sampson County

  • Scotland County

Learn how we can help you manage your small business finances



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