Improve your business credit profile

The current economy has reminded lenders to be weary about extending credit to every applicant. Business owners have found that their personal credit scores play a large role in their ability to obtain credit for their business along with their business credit score and financial outlook.

Lenders want to extend credit to businesses that have a solid credit rating along with a good payment history. Credit reporting agencies provide information about your past debts, payment history, and other financial information to lenders. They will review this information to determine if you are worthy of a business credit card.

To improve your business credit profile, follow some of these tips:

• Contact the major credit bureaus and order a copy of your credit report and score. Ask them for a list of the major factors that influence your business credit and how you can repair your credit rating.


• Review your credit reports and look for any mistakes. Typically 70 percent of credit reports have at least one mistake on them and this can be detrimental to your credit score. It is important to review your credit reports often to check for any signs of identity theft and fraud.


• Another reason to review your credit report is to make sure your vendors are reporting your payments. Your business credit rating will increase if your vendors will report your payment history.


• Pay off your old debts as quickly as possible. This is the best way to improve your credit rating. You should never carry more than 20-30 percent of the total balance on a business credit card.


• Ask for an increase in your credit limit if you have a good credit rating. This is the easiest way to improve your credit rating quickly. Having a higher limit and lower balances will reduce the total percentage amount used and this immediately impacts your credit rating.


• Don't close credit cards that you hardly use. Keep the account open because it helps to increase your available credit available. You should only close it if you have a bad payment history with the company.


• Always pay on time. To reduce the amount of money you pay toward interest, start paying your credit card bill when you receive the statement instead of on the due date. The lower balance you have, the lower the daily interest rate will be.


• Have patience. Negative factors that lower your business credit score will remain on your credit report for up to 7 years. This means you need to spend a lot of time monitoring your credit and controlling your spending if you want to improve your score.


• Control your personal finances. Since lenders are cracking down on the amount of business credit cards they issue, they want to loan the money to an individual that is able to control their personal credit. They don't want to see a person that has struggled with their personal finances because they normally run their business finances in the same way.


• Avoid applying for too many business credit cards and loans. This lowers your business credit score and it can take months to repair.


• Have a goal for the credit score you want to obtain and the date in which you want to achieve it. Remember that it takes upwards of 4-5 years to pay off $45,000 if you only pay the minimum payment on your credit cards each month. For some companies, it will take 20 years or longer to re-pay the debt because of the money they spend in interest.


• Watch the key financial indicators on your credit report and compare them to your competitors. This is a great way to indentify areas you need to improve and benchmark your company.