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8 Ways to Build Your Business Credit Score

Updated: May 3, 2023

A woman who is writing

Is your business credit score making it hard for you to get a loan? Or maybe you're simply looking for ways to build business credit so that it becomes easier to get a loan in the future. Either way, there are several actions you can take that will help improve your score.

Here are eight ways to build your business' credit score:

Build a relationship with your lender.

Your lender wants to know that you understand the terms of the loan and can afford it. They will want to know how you plan on repaying the loan and using the money. These are all things that show your lender that you are a reliable borrower, which is essential for building strong business credit.

Keep your business lines open.

One of the best ways to maintain a good business credit score is by keeping your business lines open. When you have multiple open accounts, it shows lenders that you have been able to manage money in the past and are likely to continue doing so in the future.

The exact number of business lines you should keep open depends on what type of business you are running, but generally speaking, it's best not to close any accounts unless absolutely necessary (and even then only for specific reasons). If an account is closed by mistake or because there were some problems with payment processing or customer service issues, make sure that these issues are resolved before reopening the account again!

Use your credit cards responsibly.

Credit cards are a great way to build your business credit score, but they're also a liability if not used responsibly. If you have any doubts about your ability to control spending on a credit card, try opening an account with only $100 in it and using only that amount until you feel comfortable managing more.

Once you've decided that using a credit card is right for your situation and budget, there are some things that will help ensure success:

  • Don't spend more than 30% of your total monthly income on personal expenses such as groceries or clothing (and no more than 15% on dining out). This can help prevent getting into debt down the road by ensuring that there's always money left over each month for savings and investments like stocks or bonds--which will help raise those numbers even higher!

Pay on time and in full every month.

Paying on time and in full every month is a key component of building your business credit score. It shows lenders that you are a responsible borrower, and it helps build a good payment history. If you have trouble paying on time because of cash flow issues, then try making smaller payments more frequently instead of waiting until the end of the month to pay everything off.

Avoid opening new credit lines too soon after opening another line of credit.

When you're trying to build your business credit score, it's important not to open too many new lines of credit. You want to avoid having too many open accounts at once because this can hurt your overall score.

When it comes time for lenders and lenders' automated systems (like FICO) to look at your business credit report, they will see how many different types of accounts are on the report and the age of each account. If there are a lot at once, or if they all have short histories compared with other companies similar in size and industry, then this could indicate riskier behavior than what would be expected from other businesses in similar situations.

Maintain good account history.

The first step to building your business credit score is to maintain a good account history. The two main factors that determine whether you'll get approved for financing are your personal credit score and the length of time you've been in business. If you're just starting out, this may not seem like much help; but there are many ways for new entrepreneurs to build their business credit history before applying for loans or other forms of financing.

The first thing I recommend doing is opening up one or two small lines of credit with local banks and lenders. These accounts should be used only for small purchases (like office supplies) at first--they'll be less expensive than getting an account from a national chain like Target, so use them sparingly until you know what works best for your business needs!

Stay within the credit limit on all of your open accounts.

You should also make sure that you don't exceed the credit limit on any of your open accounts. This can hurt your score in two ways:

  • It means that you have less room on which to spend more money, so it could affect your ability to keep up with monthly payments.

  • If a lender sees that you're maxed out, they may assume that there's no room for them to lend more money and thus not grant new credit in the future (or at least not at competitive rates).

Don't close any accounts unless you absolutely have to do so, and then only if you're sure it won't impact your business score negatively.

If you have accounts that are in good standing and have been open for more than five years, don't close them unless you absolutely have to do so.

If you need to close an account because of a negative item on your credit report, such as late payments or other issues, then by all means go ahead and do so--but only if it won't impact your business score negatively.

There are many things that affect your personal credit score and some of them are simply unavoidable, but you can take action to help boost your business's score

As a business owner, you'll need to know how your personal credit score affects the success of your business. A good personal credit score will help you get better rates on loans, leases and other types of financing. And if you're a sole proprietor with no employees or assets, then having a good personal credit score is essential because it determines whether or not banks will lend money to your business at all!

But while there are many things that affect your personal credit score (and some of them are simply unavoidable), there are also things that can be controlled. For example:

  • If someone has too much debt compared with their income level--for example if they owe more than twice as much on their mortgage than what they earn in a year--that could negatively impact their score because lenders may think this person isn't able to pay back what he owes in full over time without defaulting on payments due during those years where earnings were lower than expected due to unemployment etcetera...

There are many things that affect your personal credit score and some of them are simply unavoidable, but you can take action to help boost your business's score. If you follow these tips and keep up with the most important ones over time, then it will be much easier for lenders to see how reliable you are as an individual or a company when they need money.

Disclosure: For Change Financial only recommends products we would use ourselves. All opinions expressed here are our own. This page may contain affiliate links and we may earn a small commission, at no extra cost to you. Read our full privacy policy on our website.

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