Yes – believe it or not, businesses have credit scores too. And they affect what they can borrow, how they can take payments and, in some cases, even which customers they can acquire.
A business credit score is nearly the same as a personal credit score, except it ranges from 0 to 100 instead of 300 to 850. The higher your credit score, the easier it is to take payments and borrow. Banks feel safer dealing with you because they know that you are good for the money.
But how do you improve your credit score if you currently have high risk merchant accounts? Let’s take a look.
Just as with personal credit, it is possible to dispute entries on your record. Credit rating agencies regularly make mistakes because they automate so many of their processes.
Disputing errors is actually easier than you might think. Just bring up your business credit report and go through it line by line. Then contact the credit rating agency with evidence that they have made a mistake. Simple changes like this can often dramatically boost your rating.
Add Payments To Your Credit File
Sometimes, your credit file can lopsidedly reflect your payment history. Rating agencies will often collect all the payments that you didn’t make, while ignoring those you did.
You can balance things out by reporting successful payments. Doing this will shift the mix of payments in your portfolio. The more you can add, the better.
Reduce Your Credit Utilization Rate
Your credit utilization rate is a measure of the percentage of credit you’re using compared to what you have available. You want to aim to keep this below 15 percent if you can, as this signals to creditors that you are solvent.
You can improve your credit utilization ratio by doing things that impact the numerator and the denominator in the equation. So, for instance, you might try paying off your balances, increasing your credit limit or opening new lines of credit.
Pay All Your Bills On Time
You can get away with paying small suppliers (who don’t report to ratings agencies) late. But you usually can’t do the same with bigger firms, like your utility providers. If your goal is to improve your credit rating, then always pay these bills on time. Don’t delay as this may signal that lenders can’t trust you with credit.
Report Debt Repayments
If you have outstanding debts, always report repayments to credit ratings agencies. If you don’t, the debts will stay on your record, but the fact that you paid them off successfully will not appear.
If a company won’t pay for the deltion, then there is no need to pay the collection agency.
Create Credit Accounts With Suppliers
If you work with the same suppliers, then you can build a credit account to increase the number of payments you have on your file. It’s a simple facility to set up, but once you have it, you can use it to automate improvements in your credit rating over time.