How to Improve Your Business Credit Score
Increasing your business credit score is important for the success of your business. Having a high score increases your lendability, which allows you to get the products and services you need.
Our How to Improve Your Business Credit Score guide is your resource for increasing your credit score and raising your business fundability and success.
Recommended: Get an easy approval BILL business credit card and start increasing your business credit score each month.
11 Ways to Increase Your Business Credit Score
Just like your personal credit score, a business credit score is calculated by three major credit bureaus: Experian Business, Equifax Small Business, and Dun & Bradstreet. Other lesser-known business credit bureaus include Creditsafe, Ansonia, the National Association of Credit Management (NACM), and Small Business Financial Exchange (SBFE).
You will want to partner with companies that help build business credit. You'll also want to make sure you set up your business correctly.
Follow these steps to improve your business credit score to get better financing options, rates, and more.
1. Establish Net 30 Credit Accounts With Suppliers
It's best to establish your business credit with suppliers early on in the start-up phase. Net 30 vendors report tradelines to the business credit bureaus, which drastically improves your business credit scores. It is important to do a little due diligence first, like making sure your net 30 vendors report to at least the major business credit bureaus.
If you want to build your business credit score, consider these net 30 vendors that report to the major business credit bureaus.
Recommended: Office Garner offers net 30 terms to help you improve your business credit scores.
2. Form an LLC
Banks and lenders only loan money to legal business entities, like an LLC or corporation. So, before you can start establishing business credit, you’ll need to form a legal entity. Then, you can start improving your credit score.
Because LLCs are inexpensive and easy to form and maintain, most businesses benefit from starting an LLC.
3. Open a Business Banking Account
Many lenders and creditors will want to see your bank statements before approving your loan or line of credit. Being approved for loans and lines of credit will improve your credit score.
For help with choosing the right bank for your unique business, check out our Best Banks for Small Business review.
4. Get a DUNS Number
A DUNS number is an identification number for businesses. Many business creditors report credit activity to Dun & Bradstreet, which is the credit bureau that provides DUNS numbers to businesses. By getting a DUNS number, you’ll be more likely to show credit activity on your business credit report, which can help increase your credit score.
Recommended: Learn how to get a free DUNS number.
5. Get a Business Credit Card
Your next step in building business credit is to open a credit card for your small business and then make purchases on it. This establishes a good payment history which will increase your credit score.
Recommended: BILL approves everyone and offers great rewards and a whole suite of free business credit-building tools.
6. Make On-Time Payments
The most important thing you can do to improve your business credit score is to make timely payments. This will help you build a good credit repayment history that will go a long way when seeking business financing. Creditors want to see that businesses prioritize paying back debts and that they use the money to grow their business, not stymie its growth opportunities.
7. Check Your Business Credit Regularly
It is important to check your business credit regularly to make sure there are no mistakes on your credit report. If there are mistakes, this can negatively affect your business credit score. To improve your business credit score, make sure to report all tradeline errors back to the creditor.
Learn how to check your business credit report to fix inaccuracies.
8. Reduce Credit Utilization Ratio
A business’s credit utilization ratio impacts the business’s credit score. The more available credit a business has, the higher a business’s credit score. What’s more, lenders want to see that you're not maxing out on a line of credit, which could make them wary about lending out money to your business.
A simple rule of thumb is to keep revolving credit account balances below 30% utilization. This will help your business credit score improve.
9. Request Increases
Increasing lines of credit can help raise your business credit score, as it helps your credit utilization ratio. The more credit you have to spend vs. what you owe, the better your credit score.
Request an increase in your existing lines of credit when your business is doing well. Lenders give increases when your business is doing good.
10. Get a Small Business Loan
A small business loan can help you increase your business credit score and bridge the gap between your current business credit and the debt needed to make improvements. You can obtain a small business loan in a variety of ways, including through banks, SBA loans, and other funding sources such as community development loans.
11. Consider Credit Repair
Repairing your business credit also helps to improve your business credit score. This is because the fewer negative marks on your credit report, the higher your business credit score.
Businesses in poor financial shape are more likely to miss loan deadlines, lowering credit scores. Plenty of credit building services assist businesses that need help paying off debts.
Why Is Your Business Credit Score Important?
Your business credit score is important because it's a reflection of the financial health of your business. If you find that it doesn't reflect the success or potential success of your business, you'll have to do something about it. If your business is in poor health, it is unlikely lenders will lend money to your business. Poor health is a liability. The healthier your business finances, the less risk you pose to lenders.
How to Check Your Business Credit Score
As noted, it is important to check your business credit scores and reports frequently. We recommend checking every month or every three months. Here's how to check the three major business credit bureaus.
Experian Business Credit Report
- Visit Experian’s Business Credit page, enter the details of your business (or the business whose credit you're researching), and select “Get your report now.”
- Find the business with the correct address and select “Proceed.”
- Choose the desired package and select “Buy Now.”
- Create an account or log in to complete your purchase.
Equifax Small Business Credit Report
- Fill out the Equifax Small Business Credit Report request form
- Wait for a sales representative to contact you with product recommendations
- Purchase your report and get access
Dun & Bradstreet Business Credit Report
- Visit Dun & Bradstreet’s CreditSignal page.
- Enter your business name and state
- Select your business from the list of results
- Enter your business’s information and select “Submit”
Improve Business Credit Score FAQ
A good credit score for a small business is around 600, with an average credit score of 620. Small businesses that have lower scores should be looking to improve their financial health before applying for loans or increasing lines of credit.
Improving your business's credit score will have the biggest impact on how fundable your business is. Several factors influence your business credit scores. Focus on improving your balance sheet by reducing debt load, paying down old debts as well as taking steps towards improving cash flow and profitability.
Each credit reporting agency assigns a different scoring metric to its credit reports. Generally, the higher your score, the more fundable your business. For example, D&B’s score ranges from 1-100, with 100 as the highest score.
PAYDEX is a tool that allows you to see how much you can borrow on your business credit score. To increase your Dun & Bradstreet PAYDEX Score, make sure to repay debts early and have a history of reported tradelines.
Improve your Dun & Bradstreet score by repaying debts early, ensuring a history of tradeline transactions being reported by net 30 vendors, and keeping track of your credit utilization ratio. All these things will help you improve your D&B credit score.
101-670 is the Equifax business delinquency score range. A good Equifax business delinquency score is 670, while a bad Equifax business delinquency score is 101. The higher you are to 670, the better probability your business has of paying its debts on time.
Tradelines are the lines of credit that a business has with major suppliers and lenders. These tradelines can be used to determine how reliable your business is in paying its debts and is a factor in your overall business credit rating.