Repair Your Business Credit Score Fast With These 5 Tips
If your business has experienced financial difficulties in the past due to the economy, poor business, or other issues, it’s important to take the time to repair your business credit score. Your business’s credit score is important for providing you with more financing options, paying less for financing, and getting better terms from suppliers. It can also be incredibly helpful for beating out the competition. Repairing business credit isn’t like repairing personal credit; it requires a unique set of steps to repair a damaged business credit score. Let us walk you through the best way to get your credit score back on track.
What Factors Affect My Business’s Credit Score?
Each business credit bureau has different credit scoring models; however, four main factors play a role in determining your business credit score. These include:
You can find a copy of your business credit report and your score directly from one or more of the business credit bureaus: Dun & Bradstreet, Equifax, and Experian.
How to Improve Your Business Credit Score
It can take one to three years to build your credit score and become eligible for small business loans. There are many different factors that can affect your credit, such as how much money you’re bringing in, your personal credit score, and the structure of your business. Following many of the steps for repairing a credit score can also help you build one.
Every LLC does have its own credit score; however, it is based on the employer identification number (EIN) and not the LLC itself. The EIN is a nine digit number assigned to businesses by the IRS.
If you choose to start your own LLC, this will not affect your personal credit score unless you cosign for a loan for your own company. In the beginning, many companies may look at your personal credit in addition to your business credit score because your business is new and has no track record. You can start to separate your business from your personal credit by registering for a DUNS (data universal numbering system) number, having a separate business bank account, a business phone number, and a business credit card.
Business credit scores are ranked from 0 to 100, and each credit bureau sets their own standards for what is considered a good score. For example, Dun & Bradstreet like to see a PayDex score of at least 80, while Experian prefers a score of around 90.
Equifax has a two-score business credit rating system. The first is a credit risk score of 101 to 992, then a payment risk of 0-100. The Equifax Risk Score® reflects how likely someone is to become 90+ days delinquent on their credit payments within a 24-month period.
Overall, we suggest developing a broad approach to raising your business and personal credit scores. This will give you the greatest chance of being approved by any lender when you are seeking financing for your business.
It all depends on how well your credit has been built to know how much credit you can get. If you’re just getting started, you could be eligible for very little credit. But if you have an established business credit, you would be eligible for much more. And remember, paying back business loans and credit card payments–on time–can help you build more credit and make you eligible for larger amounts.