How Can I Improve My Business Credit Score?

If you’re reading this right now, give yourself an enthusiastic slap on the back. Most people would see the words ‘business credit score’ and head straight for the hills. Credit can be a minefield of confusion and dread, so we’ll use this article to explain how you can check and improve your business’s credit rating. We talk about starting a business with a low credit score in a different article!

Check your credit report on a regular basis

If you don’t check your credit report, you won’t know what’s working against you. As tempting as it may be, turning a blind eye can have serious risks for your small business. Stay one step ahead so you can spot the warning signs and react promptly. You might even spot some errors on there which can be sorted out.

Some of the most commonly-used credit reference agencies include:

Think about your business structure

The legal structure you use to register your business – such as being a sole trader or operating as a limited company – can affect both your business’s credit rating and your personal one.

Sole traders aren’t legally separate to their business, so your business’s financial credit will usually be linked to your personal financial rating. It can cause complications!

Limited companies are separate to their owners, so this will protect your business credit from your personal rating, and vice versa.

Set up credit accounts with suppliers

This may not be possible with all suppliers, especially for a particularly small business or start-up without much history.

That said, if you are able to set up credit accounts with any suppliers you work with regularly, this will help you rack up some positive payments against your name.

Keep debts to a minimum

We hate to state the obvious but keeping debts as low as possible and paying all outstanding bills on time is Good Credit 101. If you regularly fail to make pending payments, you will damage your credit profile but also flag up as a risk to potential lenders and investors further down the line.

Open a business bank account

Using a separate bank account for your business is a legal requirement for limited companies, but it’s good practice for everyone. If you’re trying to improve your business’s credit score it can be particularly useful, helping lenders make sense of your cash flow whilst you build credibility.

Learn more about using Pandle to make business accounting easier. Create an account today and decide what to do with all the extra time you get back.