8 Ideas to Try for an Excellent Business Credit Score
Getting an excellent business credit score does not happen miraculously. Some factors can lead to this. So how do some people get excellent credit scores while others are struggling to get the average score? Importantly, you need to know how the scores are calculated, among other factors like your payment history, credit utilization rate, length of your credit history, new credit, among other things. All these have various percentages that help to calculate your score. Also, check with companies that help build business credit if you are aiming at an excellent business credit score. As you read on, are some ideas that you can try for an excellent business credit score.
- Often check your credit report
Every business person with an excellent business credit score checks their credit report frequently. So, you can sign up for credit monitoring where you can get alerts for any transactions against your credit. This will help make sure you do not have any inaccuracies. Also, by regularly checking on your business credit score, you will be able to find out in case something unusual happens. Through doing this, many people can maintain a good score and have an excellent report.
- Pay bills on time
To have an excellent business credit score. It is vital to avoid paying your bills late. In this way, you keep your financial relationships in good standing. Plus, to do this, you need to have money management skills. Therefore, try to have significant savings, and at the same time, you pay your installment credit on time. Importantly, avoid carrying any balances on your credit cards and pay them off monthly as well.
- Be aware of the debt hierarchy
Those with an excellent business credit score know the debt hierarchy. Since not all debt is equal, credit card debt is one of the harsh debts to have. Most people refer to it as the worst kind of debt to deal with amidst others. This is mainly because of its high-interest rates, and most lenders look at any revolving debt you have to see the number of credit cards you have and the number of balances on the cards. In this way, they can see if you are almost maxing out your cards or if you are overextended.
- Fix any errors
Sometimes there are mistakes on your credit file that can affect your score. So you need to be checking to fix any errors if you need an excellent credit score. The errors made can drop your score from a good range to a low range if they are not corrected. Therefore, you can contact your lender or the person in charge to inquire and address the fault. Once you get the errors to sort out, the score will return to its good status. Importantly, incorrect credit bureau information can happen to anyone. Therefore, ensure you are proactive on checking your credit report at least yearly.
- Know the benefits
When you understand the benefits of an excellent business credit score, you can aim to get to one. Mainly you have access to credit when you need it, and you get lower interest rates. Hence an excellent credit score helps you run your business with less rejection, frustration, drama, and hassle when it comes to your business creditworthiness and credit score. Plus, those with high credit scores get better rates, and in the long run, they can save a lot of money.
- Do not push to the limit
Did you know how you use your credit, accounts for at least 30% of your credit score? Hence avoid pushing your credit utilization to the limit. Also, lenders do check the lines of credit you have, how recently you acquired them, and how much of the credit you have already utilized. Through this, they can tell your credit utilization and compare it with your payment history to see if they should lend you money or not. Plus, when you get to your overall credit limit, managing another line of credit may be a challenge for you, and it is unlikely you will get an excellent business credit score.
- Keep your lines open
What is the age of your business credit accounts? People with excellent business credit scores can get a boost from the age of their credit accounts. Plus, credit length histories contribute up to 15% of your score. Lenders too, check the age of your accounts and how frequently you use your account. So, an old credit account has a more positive effect on your credit score and hence why many money experts advise on not closing such accounts. Therefore, keep these accounts even with minimal usage of them as the lenders of the account will keep reporting your good relationship with them.
- Have savings
Lastly, to get an excellent credit score, at its core, it is how you manage your debt. This includes paying off balances and making timely payments as the score will reflect it. Plus, when you save enough, you can comfortably bill other business services to your credit card, and it will not affect your business eventually. Hence, it is important to live within your means, and by doing this, you can pay off your bills with ease and also save. Also, when you have savings, they can come in handy during tough times, and you can use them to save your credit score by maintaining timely payments and clearing your credit balances.
In conclusion, it is beneficial to have an excellent credit score for your business as it enables you to get the best deals. However, lenders are not only out for excellent scores, but improved scores that are above average when it comes to their decision-making process. Also, borrowing some of the above ideas can help you get a high credit score for your business accounts. Plus, you can maintain or improve your score by keeping your balances low, paying bills on time, and applying for new credit when needed, in addition to the above.