Maintaining a healthy credit score is essential for the growth and sustainability of your company. A strong credit profile opens doors to financing options and builds trust among suppliers and partners. If you’re looking for some practical advice to improve your company’s credit score, you’ve come to the right place. Let’s have a quick overview of a business credit score before diving into practical tips to make it stronger.

A business credit score, or SME Credit Score, is a metric that signals the likelihood that a business will repay its loans on time and not default. Lenders rely heavily on business credit scores to determine loan eligibility and interest rates. These scores depend on the bureau that generates them and can range from 0 to 100, 1 to 5, or even 300 to 850. For example, a TransUnion Consumer Credit Score ranges from 0 (poor) to 999 (excellent). The higher your score, the better your company meets its financial responsibilities.

Late payments, high credit card balances, and a lack of credit diversity can contribute to a lower score, limiting your business’s ability to secure loans or favourable credit terms. Conversely, the higher the business credit score, the lower the risk to lenders and other companies. A healthy credit score reflects a solid track record of timely payments, responsible credit utilisation, and a diverse credit portfolio.

Now that we’ve had a quick refresher on an SME Credit Score, let’s discuss what you can do to improve your company’s credit score.

First and foremost, pay your bills on time.

Timely payment of bills is a cornerstone of a healthy credit score. Ensure you pay your suppliers, creditors, and service providers on or before the due date. Late payments can have a lasting impact on your creditworthiness, so make it a priority to settle invoices promptly. Set up a trustworthy accounts payable system, use accounting software to automate payments, and continuously monitor your cash flow.

Review your business credit score at least twice a year.

Inaccurate information can negatively impact your credit score without you even knowing it! Review your credit report meticulously for any errors or discrepancies. If you spot mistakes, promptly contact the credit bureau to find out what happened. In South Africa, your credit company is legally obliged to explain the reason. It could be due to an oversight on their side or because a vendor reported you for withholding payments on reasonable grounds, like invoice disputes. In both cases, you’re entitled to a correction on your credit score.

Communicate with creditors.

If you encounter difficulties in meeting payment deadlines, proactively communicate with your creditors. Establishing open lines of communication can pave the way for more flexible payment arrangements and prevent negative entries on your credit report.

Diversify Your credit.

A mix of credit types can positively influence your credit score. Consider expanding your credit portfolio by using a combination of trade credit, business credit cards, and term loans. Remember to use these credit sources responsibly to avoid overextension.

Establish a credit history.

If your business is relatively new, building a positive credit history is crucial. Start by establishing credit relationships with suppliers who report to credit bureaus. Consistently meeting payment obligations will gradually create your credit profile and enhance your overall creditworthiness.

Before diving into improvement strategies, it’s crucial to understand where you currently stand. This is where Cred-it-data comes in. As a leading credit bureau in South Africa, Cred-it-data can provide businesses like yours with a comprehensive view of your business credit profile, including your credit score, credit history, and any public records that may affect your creditworthiness. By checking your credit score regularly, you can stay on top of any issues and take steps to improve your score over time. Contact us today and start your journey into the known!

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