Repair Your Business Credit Score Fast With These 5 Tips
If you’re reading this, then you know that your business has a credit score that’s separate from your personal credit history and personal credit score. Business credit is a very different animal from personal credit, and it takes a unique set of steps to repair a damaged business credit score.
Today I’m going to share five proven tips that will help you repair your business credit score.
You will be amazed how fast can your credit score improves!”
A higher business credit score will help you land more financing options, pay less for financing and get better terms from suppliers all at all. A good business credit score will give your business a leg up over the competition.
Dun and Bradstreet
Although each uses slightly different credit scoring models, you can expect four factors to really impact your business credit score. These are the number one of your business’s payment habits. This includes the number and types of trade lines, the size of your outstanding balances, payment history, and credit utilization. Tradelines might include business credit cards, business loans, and accounts with suppliers of goods and services.
Number two, derogatory items, the presence, amount, and recency of negative items on your business. Credit report such as tax liens, court judgments, and bankruptcies affects your score.
Number three is the number of business credit inquiries. These are triggered when your business applies for credit and can also affect your score. And finally, number four, inherent business factors such as the number of years you’ve been in business, the company size, and your industry, you can find a copy of your business credit report and your score directly from one or more of the business credit bureaus.
Now that you know what factors can cause a shift in your business credit score.
We’ll cover the most impactful five ways to repair a poor business credit score.
Tip number one correct errors on your business credit report. According to a survey by the Wall Street Journal, nearly 25% of business owners who check their business credit reports found errors; these errors could be responsible for your low business credit score. Even something as simple as the wrong industry code for your business could throw off your credit. For example, let’s say you make software for trucking companies, but the business credit bureau accidentally categorizes you as a trucking firm, places you into a riskier category, and you could end up paying hundreds or even 1000s of dollars more for financing to correct errors on your business credit report.
Follow the agency’s process for error reporting. In most cases, you’ll need to highlight the incorrect information on your report, provide proof to show why there’s an error, and either mail, email, or fax this documentation to the agency. Most investigations are completed within 30 days, though sometimes agencies like Experian have a portal where a business representative can make certain updates immediately.
Tip number two, choose suppliers and lenders that report payments. Small businesses that have been behind on payments in the past can repair their business credit by showing timely payment behavior, but your positive payment history can only be rewarded if you work with suppliers and lenders that report payments to the business credit bureaus. For example, if you are a retailer of household goods who buys inventory from a wholesaler, ensure that the wholesaler reports to at least one and preferably more business credit bureaus; that way, every time you pay an invoice from your wholesaler on time or early you’ll be building up your credit score a little bit at a time. 5 Star Processing and Uline are a few examples of vendors that report to the business credit bureaus. You can also apply for a corporate fuel card to add an additional trade line to your business credit report.
Tip number three apply for a business credit card. One reason for an important business credit score may be that you simply don’t have enough trade lines on your account one of the easiest trade lines to apply for a business credit card is even making small purchases on a business credit card and paying them off on time each month can help you make big gains and your business credit score if you’re unable to qualify for a regular business credit card, try a secured credit card. With a secured credit card, you put down a monetary deposit to qualify for the credit line. Alternatively, you can apply for a corporate credit card from a big box retailer like Home Depot or Lowe’s
Tip number four be cautious when applying for new credit. If you’re on the market for a business loan or business credit card, you could end up in a catch-22. You need financing, but every time you apply for credit, you get hit with an inquiry that further damages your business credit score. The key here is to only apply for a few lenders or credit cards, which will be the best fit for your business. Do your research and advance to understand what you might qualify for, spread out your applications, and only apply for credit when you need it. Never borrow more than you need with a single application that won’t hurt your credit score. The team at 5 Star Processing can help you figure out how much financing you can afford and the best lenders for your company.
Tip number five keep your public records clean. The final tip for repairing your business credit score is to keep negative public record items off your business credit report items like unpaid business taxes, business bankruptcies, and court judgments remain on your business credit report for years, and they can be very damaging to your business credit score. We suggest keeping a calendar of tax deadlines so you never miss one, and the moment you start experiencing cash flow issues, try to cut back on business expenses or increase your business revenue so you don’t fall into a deeper hole and start missing payments. If you experience legal trouble, contact a business lawyer right away. Sometimes these types of issues are out of your business’s control, but you can take steps to minimize the damage to your business credit history.
Those are our five tips for repairing your business credit score. With these tips in mind, you can more confidently secure the best, most affordable financial products for your business. For more on credit loans. And other small business topics, check out 5starprocessing.com/blog
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Frequently Asked Questions (FAQ’s)
What is the quickest way to build business credit?
Well, the quickest way to build business credit is following the process. The process does take some time but if done correctly can increase your chances of building business credit quickly the process usually takes 12 to 16 months and requires at least 15 trade lines to complete it the process moves a lot faster in tier 2-3 and four then it normally does in tier one.
What is credit restoration business?
The credit restoration business is one someone takes your personal credit and fixes it for you since they know the process able to help you get the results that you’re looking for quickly.
How small businesses improve credit score?
Example for a small business to improve its credit score first and foremost it has to know what its credit score is could simply be done by getting a credit monitoring program for its credit score and then after it gets a credit monitoring program for its credit score it figures out what the score is when figures out what the score is then it fixes it from there normally starting with your net 30s and after going to your net 30s moving to your gas cards and after your gas cards moving on to your store cards and then eventually credit cards
Can someone help me fix my credit?
Yes someone can help you fix your credit and also someone can help you build it from scratch so it doesn’t matter if you don’t have any credit or you have bad credit there’s many people out there that can help you do both to get you to where you need to be.
How can I raise my credit score 200 points in 30 days?
With personal credit it’s easy to get 200-point score increase than it is to get on business credit on your personal file it could be SEC as getting a credit builder card it could be as easy as removing a collection account or a charge off or a repossession bankruptcy etcetera. But with business credit it’s more difficult because each Bureau has a different scoring model for example duns in Bradstreet as of out of 100 scoring model while Experian and Equifax have a 120 and out of a 430-scoring model
How do I raise my LLC credit score?
Raising your LLC credit scores starts with establishing your EIN number and after establishing your EIN number is getting that 30s then fuel cards and store cards and then credit cards the process can take anywhere between 1224 months depending on the amount of per capita you have
Does an LLC have its own credit score?
lLC does have its own credit score but it is based on the EIN number and not the LLC itself
Does starting an LLC affect credit score?
Starting an LLCgives you a clean slate for your credit score but you do have to make sure you have an EIN number with that brand new LLCto get a credit score
How much credit can I get with an LLC?
It all depends on how well your credit has been built to know how much credit you can get with your EIN number if you’re just getting started could be very little credit but if you have an established business credit you will most likely be able to get a lot of credit and it could range from anywhere from 10,000 all the way to $1,000,000 in credit lines
How do I build credit with an EIN?
Building credit with your EIN number is very simple you just follow the process and where it asks you to put your EIN number inside of the application that’s where you will fill it out and then they will report your credit to your EIN number
Can an LLC build credit?
Your LLC can build a credit score only if it has an EIN number if it does not have an EIN number it will not be able to build business credit
Does an LLC have its own credit score?
Yes technically your EIN has its own credit score but not the LLC but the EIN is tied to your LLC