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How to improve your business credit profile

A good personal credit score will demonstrate your business’s creditworthiness. According to the National Small Business Association’s data, over 70 percent of small business owners seek financing. Recent data from the Federal Reserve shows that over a third (35%) of businesses with a minimum two-year history are denied a loan. A low credit score or a poor credit profile is one of the most common reasons that businesses cannot qualify for small business loans.

To increase your chances for a loan approval you must prove that you can manage your money. You can improve your credit rating by following these four steps:

1. Pull reports and check for errors

Individuals and business owners tend to only check their credit when they need a loan. Regularly reviewing your credit reports can help you improve your business’s profile. This habit will help to ensure that minor mistakes do not negatively affect your business credit profile.

Have you paid off the balance on a purchase of new equipment recently? Chances are, if the payment hasn’t been reflected on your report it was a clerical mistake. You can file a dispute if the information on your report is incorrect or outdated.

Three major business credit bureaus are FICO Small Business Scoring Service, which is used exclusively by the U.S. Small Business Administration. They are Dun and Bradstreet PAYDEX and Experian Intelliscore. The business credit score is determined by the history of your business in making payments to lenders and suppliers. It can be affected by the industry, size of your business, and revenue. Each bureau has its own data points and metrics for determining creditworthiness. They also have different ways to file and resolve a dispute.

2. Maintain a low debt load

Debt doesn’t always lower your score. It can, however, if you have a high debt financing ratio. You can pay off business debt in several ways, such as eliminating extra costs, restructuring the debt through a third-party, or formulating a repayment plan. You should also be constantly aware of your financial situation, and adjust your budget to account for any unexpected changes in your cash flow. Maintaining a low debt load will help improve your credit score and show lenders that you are in control and can pay your bills on time. The lower your debt is, the less likely lenders are to consider you a risky borrower.

3. Boost the credit available on business credit cards

Lenders will also consider the amount of credit you have available and they prefer a low credit utilization ratio. Paying off your bills on time, and ideally before the due date, will increase your funds available while reducing your ratio. NerdWallet points out that D&B only gives 100 PAYDEX scores to those who pay their bills before the due date. Use your business credit card on a regular schedule. You can improve your credit rating by using your card regularly, keeping a low balance and paying your creditors on time.

4. Keep a steady cash flow in your bank account

It’s crucial to keep track of the money flowing in and out of your company. A positive cash flow indicates that your business is well-capitalized to pay off debts, cover expenses and cover unexpected expenses. Cash flow in your account does not directly impact your credit score, but it is something lenders consider as part of their underwriting process. According to the U.S. Small Business Administration (SBA), a lack in steady cash flow is one of the top reasons for failure.

QuickBridge can help improve your business credit profile

These tips will help you improve your credit score and set your business up for success. Paying down your QuickBridge loan consistently is a great way to build up your business credit and ensure success.

Maintaining a healthy business credit score and a good business credit profile will make it easier to obtain financing in the future to cover your business expenses.

QuickBridge is able to help if you have a poor business credit rating but require immediate working capital. We specialize in lending fast to small business, whether it’s for bad credit loans or other forms of working capital. Our application process is fast and requires minimal paperwork. If approved, the funds will be deposited in your account within 24 hour.

Contact us today to process your loan application for small businesses.

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