Still recovering from what 2008 did to your business credit score? Each business credit-reporting agency uses its own statistically derived algorithm to determine risk based on multiple factors to calculate your score.
But, according to Marco Carbajo, founder of the Business Credit Insiders Circle and blogger for the SBA, there are many common factors used to calculate business credit scores. He suggests these ways to improve your business credit scores and ratings.
- For maximum impact, pay invoices ahead of the due date. The greater the number of days the greater the impact: a business that pays its bills promptly will have an 80 Dun & Bradstreet Paydex Score โ a key business credit score โ while a company that pays 30 days sooner than terms may have a 100 D&B Paydex Score.
- The number of trade references reporting on your business credit report is what generates a business credit rating. For example, it takes a minimum of three trade references to generate a Paydex Score with Dun & Bradstreet. Not all vendors and suppliers share payment data with a business credit-reporting agency, but you have the opportunity to add trade references to your companyโs D&B credit file.
- A companyโs credit-utilization ratio is one of the important factors credit-scoring models use to calculate business credit ratings. Work to keep your credit utilization under 30 percent. Lenders want to see that your company can properly manage its debts. Request an increase in your credit limit. It lowers your credit utilization ratio and improves your business credit ratings.
- No one knows your business better, so itโs essential that your profile is accurate and up-to date when you apply for credit. Not only does your business profile contain your companyโs banking and payment data, it also contains critical information that other businesses, suppliers and lenders use when deciding whether to extend credit to your company.
Improving your business credit scores and ratings enables your business to maximize its funding potential and obtain the most favorable terms possible.
