How to Improve Your Credit Score for Your Small Business

Companies spend millions to build a repute that goes well with the corporate watchdogs as well as with the lenders. After all, every business needs financial injection at some stage. When a company opts for a business loan, the thing that helps it the most in getting over the financial liquidity crunch is its credit score.

What Exactly is a ‘Business Credit Score’?

Much like a personal credit score, a business credit score serves the same exact purpose. A credit reporting agency has devised multiple methods on how to calculate your score, or “creditworthiness.” This includes calculating your payment history as the payments, whether on time or delayed, affect the credit score. Outstanding payables and the number of years you’ve been in business, factors into your credit score. The closer the score is to 100, the better the business’s chances to get their hands on that financial injection. The companies can then utilize the financial resources to either expand their business network or establish a bigger interaction with their potential customers through an increased marketing budget.

Why Your Credit Score Matters and Why Should You Improve It?

A credit score allows potential lenders to get an idea of how good your business is at returning its payables and paying its bills on time. These factors help them decide if you are a worthy business to invest their capital in. It actually provides them a much-needed cushion about the future of their investment in your company. If you’re able to maintain a strong credit history, you will find it easier to attract a bigger number of lenders to cater to your financial needs.

Securing financing is one of the biggest motivations for a business to monitor their credit score. A high score can allow a company to acquire and secure loans for greater amount. Alternatively, a low credit score would lead to problems in obtaining loans and could leave the business alienated by lenders due to their untrustworthiness.

If the business has a not so satisfactory credit score, there is nothing to fret about. There are various ways to attend to a poor credit score and improve it effectively in a short period. Some means are a lot more obvious than others; fortunately, we have compiled a list of vital ways to help improve the health of your company’s credit score.

1. Creating a Credit Rapport

If the business is a new one, it is essential to establish a credit history. One of the more accessible ways is to apply for a business credit card. A business credit card is comparatively much easier to acquire than a large-sum loan; especially for a business with no previous credit history.

With a credit card, the business can finance its immediate expenditures, but the point is to pay as soon as the bill comes or even better; ahead of time. It is imperative to maintain a good credit history by building a reputation of being a business that punctually tends to its payables.

This leaves a positive impression on lenders in the business, and they will look kindly over the business in the future when it applies to loans.

2. Don’t Damage Your Personal Credit

A small business often has a sole proprietorship or it has somewhere between 15-20 employees working for the business. In this format of a business, the owner’s capital is the business capital and vice versa. There are not two separate distinguishable entities.

So, when a business of this size applies for a loan, lenders also pay heed to the owner’s personal credit score.

If the owner has a bad habit of returning his dues on time, this will reflect poorly on the business as well. Therefore, it is imperative for any entrepreneur to maintain a great personal credit history, so that when the times to come for his business to seek financial resources, his positive reputation helps the cause.

3. Be Mindful of Lenders

The idea of having a high credit score is to build better relationships with your lender to secure future loans on improved terms and lower interest rates.

It is not only about doing business with lenders, but it is also being aware of who they are doing business with and which lenders they can benefit from the most. For companies with bad credit, small business loans can turn out to be the perfect solution. All you need to do is to find out the borrowers that provide the small business loan solutions at relatively easier terms.

4. Monitor Your Credit

It is apparent advice that business, much like an individual, should not max out its credit cards. The higher the amount owed, the lower the credit score tends to be. It is best, as discussed to take small sums out and make quick payments to make sure that your credit score doesn’t take a hit.

Just an additional point, sometimes the system makes mistakes too. The business credit reports more often come across mistakes than personal credit reports. So, the company should be diligent in finding out and fixing these mistakes.

5. Absentmindedness

A lapse in concentration happens in real life as well as in the business world. It is crucial to know if your pursuit of a credit course is worth the risk. This is where two types of credit actions are brought to the table; one is “hard pull” while the other is a “soft pull.”

These types of credit actions enable lenders to have a look at your credit information. However, the only negative comes when going for a hard pull. So, a hard pull occurs when a lender themselves go through your credit report after you apply for a loan. The hard pull is alarming to lenders as it suggests the business is in desperate need of credit. Additionally, it also indicates that they have been rejected by numerous lenders and should be avoided.

On the other hand, the soft pull is when a company checks the business credit report beforehand, in a sort of application vetting stage. The difference lies in the presentation of data.

A hard pull suggests the business has something to hide from its lenders whereas a soft pull indicates the business is clean and is straightforward with their credit history.


A huge majority of international businesses rely heavily on business loans to continue their journey to success. It is important for business owners to be able to find a proper bank and the right way to manage timely payments of the loans and credit cards, which allows them to prepare a prosperous future for their brand.

The points discussed above are here to help businesses improve their credit score and secure future financial funding. A small business is on the right track if it prioritizes paying back the loans so that credit score and business image improves. It is imperative because the availability of financial resources allows small businesses to not only expand their reach but also helps them to cater to bigger orders and improve their reputation among their existing and potential customers.


Mathew Jade

Mathew Jade

Mathew Jade is a business, finance and technology blogger who spends his entire day writing quality blogs. He is a passionate reader and loves to share quality content prevalent on the web. For more updates follow him on Twitter
Let's be inbox friends!

Let's be inbox friends!

Drop us your email to receive a weekly digest of our latest blog posts right in your inbox.

To confirm your subscription, please check your email.