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Top 10 Ways to Improve Your Business Credit in 2023

Starting and running a business is no easy feat. There are endless tasks to complete, deadlines to meet, and challenges to overcome. One aspect that is crucial to the success of your business is having a solid business credit score. A good credit score can open doors to better financing options, more favorable terms, and increased credibility with vendors and clients. But what if your business credit score is different from where you want it to be? Don't worry. There are steps you can take to improve it. In this article, we will go over 10 ways to improve your business credit. By following these tips, you can take control of your credit score and put your business on the path to financial success.

  1. Monitor your business credit reports regularly with By staying up-to-date on your credit information, you can catch any errors or issues that may negatively affect your score. It's also a good idea to check your reports regularly to track your progress and make sure your credit is on the right track. Additionally, monitoring your reports can help you stay aware of any changes or updates to your credit profile, such as new accounts or late payments. Overall, regularly checking your business credit reports is an essential step in managing and improving your business credit.

  2. Utilize an expense management system like Divvy. Being able to track your expenses and stay within your budget is a huge win when it comes to business (personal too!). Using an expense management system like Divvy would allow you to see all of your expenses in real-time for each category of business (Gas, Supplies & Materials, Advertising, etc). And get this? Divvy is also a credit card so you are building business credit as you go along, just by paying for your regular expenses. If you have employees, the Divvy card can also be issued to them with a set budget. Virtual cards are also an excellent way to keep fraud away, and Divvy cards have this option as well. Bonus tip: Divvy integrates with Quickbooks Online, the #1 Accounting system in the world.

  3. Pay your bills on time: One of the most important ways to improve your business credit is to pay your bills on time. Late payments can significantly damage your credit score and hinder your ability to secure loans or credit in the future. Set up automated payments or reminders to ensure that all of your bills are paid on time. Additionally, it's important to stay on top of your accounts and dispute any errors or discrepancies that may affect your credit score. By consistently paying your bills on time, you can establish a strong credit history and improve your overall creditworthiness as part of the ten ways to improve your business credit.

  4. Keep your credit utilization low: This refers to the percentage of your available credit used at any given time. Keeping your utilization low, ideally below 30%, demonstrates to lenders that you are a responsible borrower who can manage their finances effectively. High utilization, on the other hand, may signal to lenders that you are over-reliant on credit and may be at risk of defaulting on your loans. By keeping your utilization low, you can improve your credit score and increase your chances of securing favorable loan terms and rates in the future. This is just one of the many ways to improve your business credit, so be sure to implement all of the strategies outlined in this article to see the best results.

  5. Don't max out your credit cards: This can have a negative impact on your credit utilization ratio, which is a key factor in determining your credit score. Keeping your credit card balances low shows lenders that you are responsible with your credit and can manage your debts effectively. In addition, high balances can lead to higher interest charges, which can put a strain on your financial resources. So, if you want to improve your business credit, keep your credit card balances in check and avoid maxing out your cards.

  6. Use a business credit card. Using a business credit card is one way to improve your business credit. By consistently paying off the balance on time and in full, you can demonstrate to creditors that you are a responsible borrower. A business credit card can also help you separate your personal and business finances, which can be helpful for tax purposes and keeping track of expenses. Using a business credit card, like the Capital One Spark card, can also earn you rewards, such as cashback or points, which can be redeemed for travel, merchandise, or other perks. However, it's important to be mindful of your business credit card's terms and interest rates, as well as to spend appropriately and avoid raising a large balance that you can't pay off.

  7. Only open a few new credit accounts at a time. Opening too many new credit accounts at once can negatively impact your business credit score. This is because credit scoring models consider the number of recent credit inquiries and new accounts as potential red flags for financial instability. Suppose you have too many new accounts in a short period of time. In that case, it can indicate to lenders that you may struggle to manage your finances effectively. To improve your business credit, it's important to be strategic about opening new accounts and to only apply for credit when you really need it. It's also a good idea to spread out your credit applications over time rather than apply for several accounts simultaneously to avoid damaging your credit score.

  8. Don't close old credit accounts. Closing old credit accounts can hurt your credit score because it lowers your overall credit limit and increases your credit utilization. If you don't want to use an old credit account anymore, leave it open and don't use it.

  9. Avoid using personal credit for your business. Using your personal credit for your business can cause your personal and business credit to become intertwined. This can make it hard to separate your personal and business credit and can hurt your business credit score. Instead, use business credit cards and loans specifically for your business.

  10. Establish a good relationship with your creditors. You can demonstrate your responsibility as a borrower by consistently paying your bills on time and communicating with your creditors when you may have difficulty making a payment. This can lead to more favorable terms and rates when borrowing in the future, as creditors will see you as a reliable and trustworthy borrower. Additionally, building a positive relationship with creditors can also make it easier to negotiate payment plans or obtain additional financing when needed.

In conclusion, improving your business credit is crucial for the success and growth of your company. By following the 10 ways outlined in this article, you can take control of your credit and improve your financial standing. Whether it's paying your bills on time, diversifying your credit mix, or monitoring your credit report, these strategies can help you achieve a higher credit score and secure more favorable loan terms and rates in the future. Remember, building business credit takes time and effort, but the long-term benefits are well worth it.

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