Your business has its own credit score, one that’s distinct from your personal credit score. If you need to apply for a business loan, your prospective lender will almost certainly look at your business’ credit report.
Your business credit rating is based on debt repayment history, bankruptcies, liens, and so on. You can take positive steps to rebuild your credibility with lenders even if you have poor credit due to past difficulties.
1. Pay Your Bills on Time
Your bill payment history can account for more than one-third of your credit score. Pay any bills on time.
2. Build Trade Credit
Establish credit with your vendors and pay them within the agreed amount of time. Ask your vendors if they report their trade information; those that do can help you establish a better business credit score.
3. Talk to Your Creditors
Many small businesses have found themselves in the hole as the result of unexpected external forces. If you find yourself struggling with your accounts payable, let creditors know what’s going on with your business and make a good faith effort to pay down your bills. You may find they’re willing to work out a payment plan directly with you instead of reporting the late payment to the credit reporting agencies.
4. Pay Down Outstanding Credit Balances
Reducing the amount you owe can help your credit rating. The best way to pay down outstanding balances is to focus on the accounts charging you the highest rate of interest first. Keep up with the minimums on your other accounts and pay as much as you can afford on the one with the highest rate. When you have paid off this creditor, shift your focus to the next highest rate, and so on.
5. Check Your Credit Reports
Check your business credit report. Attend to outstanding debts, and if there are errors, address them immediately.