Regions Bank: Business Credit

Seven Ways to Improve Your Business Credit Rating

Business credit is gradually becoming more available to small businesses as the economy recovers. If you're considering applying for credit, it's vital to maintain a good credit rating to qualify for the best terms.

Here are seven tips to help improve your business credit rating:

1. Make timely payments
The most important measure of your credit-worthiness is your record of paying on time. A long period of consistently paying your bills on time will contribute strongly to your credit score. On the other hand, a delinquency can cancel out years of faithful payments and force you to start over again in building a good credit history.

2. Maintain multiple accounts
Having several credit card and business checking accounts in good standing shows that you are skilled at managing your cash flow. Managing different types of credit, business loans, credit lines and credit or charge cards - helps you demonstrate your ability to use credit wisely.

3. Supply self-reported data to credit bureaus
It's a good idea to establish a profile with the leading credit and business information providers: Acxiom®, Dun & Bradstreet, Equifax® and Experian.  If you've been in business for any significant amount of time, these firms may already have created a profile for you.

4. Review your credit report regularly
Review your credit report from the various business information providers regularly - once a year is good. Pay particular attention to the accuracy of your company data and payment history. The credit report will also show any accounts sent for collection, bankruptcy or pending lawsuits, and filings under the Uniform Commercial Code (UCC) regarding assets you have pledged as collateral for loans or leases. This information may be summed up in a credit risk rating, which helps lenders and suppliers gauge how likely you are to let bills lapse or fall behind on payments. If you find mistakes in your report, contact the provider in writing to set the record straight.

5. Ask suppliers to report your payment performance
If the timely payments you make to suppliers aren't reflected in your profile, you may not be receiving the credit you deserve. Check your business profile regularly to be sure key supplier payment relationships are reported. If some are missing, ask those suppliers to report your payment history.

6. Pay off debt
When you finish paying off a loan or reduce a credit card balance, your credit rating should improve. The bigger the amount you pay off, the larger the lift can be.

7. Monitor your personal credit report
Your personal credit rating can become part of the picture when lenders assess your character and your net worth - two of the five criteria on which many loan requests are judged. Use the same practices - i.e., making timely payments on multiple forms of credit - to maintain a strong personal credit rating.

Above all, be patient and persistent. With careful planning and good financial management practices, you can make a significant improvement in your business credit rating and improve the chances of obtaining the financing you need.