How Can I Improve My Company’s Credit Score?
How Can I Improve My Company’s Credit Score?

Maintaining a healthy company 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. Implementing strategies to improve your business credit can significantly impact your success. 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.

Pay Bills on Time to Improve Your Company’s Credit Score

Timely payment of bills is a cornerstone of a healthy credit score. Make sure to pay your suppliers, creditors, and service providers by the due date. Late payments can negatively influence your company’s credit score. Establish a reliable accounts payable system, leverage accounting software to automate these payments, and keep a close eye on your business finances to ensure your business maintains a strong credit profile,

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 to your credit score.

This insight can also guide you in making decisions that affect your credit score, like using a business credit card wisely and managing available credit efficiently. Additionally, monitoring and improving your business credit profile can provide leading credit bureaus with a positive view of your business’s credit health, affecting your score for the better over time.

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 company credit report.

By having a timely conversation with creditors, you can effectively manage your business’ credit health using insights from your company’s credit score. This proactive approach not only helps in understanding how your business credit profile is perceived but also allows you to take steps to improve your credit score over time.

Diversify Your Credit.

Diversifying your credit profile with a mix of credit types can have a positive impact on your business credit score. Expanding your portfolio through trade credit, business credit cards, and term loans is advisable. It’s essential to manage these credit sources wisely to prevent overextension, as responsible usage is key to maintaining a healthy business’s credit standing.

Establish a Credit History.

For companies just starting out, building a strong business credit profile is essential. To improve your business credit score, initiate credit relationships with suppliers who report to credit reporting agencies. This is a foundational step to enhance your company’s creditworthiness.

Consistently fulfilling payment obligations not only helps to build your credit profile but also positively affects your score over time. This methodical approach will gradually establish a good overall business credit score, vital for your company’s financial health and ability to take out a business loan or secure other forms of credit.

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 company 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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