Business Credit Improvement Tactics

improve business creditWhether you’re a startup or a seasoned business, establishing a creditworthy company should be among the top priorities on your list. Building and improving the depth and diversity of your business credit report can have lasting financial benefits, and help provide increased business opportunities throughout the lifespan of your company. To that end, here are several ways to build and impact your business credit.

Establish New Credit

One of the best ways to acquire credit is with business-to-business financing, also known as trade financing. Suppliers that provide products and/or services your company needs may offer a line of credit with net-30 to net-60 day terms. Every supplier that your company does business could potentially become a trade reference* that may be added to your business credit report.

You can also help build credit for your business by obtaining an unsecured or secured business credit card. While trade credit can help show how your business handles short-term financing, a revolving line of credit can show how your business manages recurring debt.

Maximize Payment Activity

Paying your invoices on time and according to creditor terms can help you establish positive payment activity. However, in order to further impact your ratings, it is in your company’s best interest to pay better than the terms require. Paying invoices 10-20 days ahead of the due date should allow you to maximize your payment activity and have the greatest benefit in terms of your business credit ratings.

Maintain Credit Usage and Manage Debt-to-Credit Utilization

Credit usage can potentially play a key role in building a positive payment track record. It’s important to use your business credit accounts on a frequent basis, as well as maintain proper credit-to-debt utilization.

Ideally, you should keep your individual and overall debt to credit utilization less than 50% on revolving accounts.  However, it’s equally important to show that your business can properly manage large purchases using its credit lines. Using revolving credit for large purchases may positively impact your business credit scores provided they are promptly paid off.

Diversify Credit Account Types

Another way to help impact your business credit is by having a blend of credit types. Using various types of financing such as short-term, revolving, installment, and lease programs shows lenders that your business has sound fiscal management.

While it may take time to build a business credit report that has depth and diversity, it’s equally important to take the time to manage and protect the good credit that your company may have already built. To help accomplish this, you should actively monitor your business credit reports on a regular basis.

Photo Credit: Work Life Superstar

*Trade References will be added subject to D&B® verification and acceptance. Please see http://www. dandb.com/glossary/trade-references/ for eligibility, process and other information regarding Trade References.