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Writer's pictureCristina Carnerero

How to improve your small business credit rating

Updated: Jun 5, 2022

One of the most important things you can do to improve your small business credit rating is to make all your payments on time. This includes payments to vendors, landlords, utilities, and any other creditors. If you have difficulty making timely payments, you should contact your creditors to work out a payment plan.

Another important factor in your credit rating is the amount of debt you carry. You should try to keep your debt-to-asset ratio low, which means having more assets than debt. You can do this by paying off debt as quickly as possible or by increasing your sales so that you have more revenue coming in.

You should also avoid using too much of your available credit. This is called your credit utilization ratio, and it indicates how much of your credit is being used for repaying debt. A high credit utilization ratio means you're paying back debt with borrowed money, which could potentially increase your interest rate or your debt load.





Pay your bills on time

One of the most important things you can do to improve your financial health is to pay your bills on time. This includes everything from your rent or mortgage to your credit card bills and utility payments. When you pay your bills on time, you avoid late fees and penalties that can add up quickly. Additionally, paying your bills on time shows creditors that you’re a responsible borrower and can help you qualify for better interest rates in the future. Finally, paying your bills on time can help improve your credit score, which can save you money on interest rates for loans and lines of credit down the road.

Keep your balances low

Keeping your balances low is a great way to stay out of debt. When you have a low balance, you are less likely to spend more than you can afford. This will help you stay within your budget and avoid using credit to cover your expenses. Additionally, having a low balance can help you qualify for lower interest rates on loans and credit cards. This will save you money in the long run and help you keep your financial obligations under control.

Use a mix of credit products

Credit products come in many different forms. The most common are credit cards, but there are also products like lines of credit, mortgages, and auto loans. Each has its own purpose and can provide different benefits. Using a mix of credit products can help you save money and improve your credit score. For example, using a credit card for everyday expenses can help you rack up rewards points. At the same time, a line of credit can provide a lower interest rate for larger purchases. The key is to use each type of credit product wisely. That means knowing when to use each one and understanding the terms and conditions.

Monitor your credit report for errors

A good credit score is important for getting approved for loans, credit cards, and other financial opportunities. You can monitor your credit report for errors by requesting a free copy of your report from each of the three major credit bureaus every year. You can also create a free account with Credit Karma to get weekly updates on your credit score. If you see any errors on your credit report, you can dispute them with the credit bureau.

Limit the number of hard inquiries on your credit report

A hard inquiry is when a lender checks your credit report when you apply for a loan or credit card. Too many hard inquiries can hurt your credit score. You can limit the number of hard inquiries on your credit report by only applying for new credit when you need it. When you do apply for new credit, shop around for the best rates and terms so you only have to apply to a few lenders.

To sum up

You’ll need a good credit score to get approved for loans, credit cards, and other financial opportunities. But how do you get a good credit score? While it isn’t easy, it is possible. Follow the tips above and improve your credit score.

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