We always focus on personal credit scores and overlook business credit scores. However, it is best to note that both are essential as business credit scores directly affect the security of your business financing options.
Your company’s financial history determines a business credit score and is linked to your Employer Identification Number (EIN). On the other hand, personal credit is dependent on your spending habits and is connected to your social security number.
Each credit score helps financial entities determine creditworthiness and customize financial products. A lower score can bar you from personal or business loans. But, if you get the loans, they’re at higher interest rates that harm your business in the long run.
In this article, you’ll learn about business credit card scores and ways of improving low scores cheaply.
What Is a Business Credit Card Score?
An excellent personal credit score can get you the best mortgages and other deals to achieve your dreams. Similarly, a good business credit score can get you the best financial deals to meet your business goals.
Personal credit score has a FICO scale of 300-850. An 850 credit score is considered to be nearly perfect and would open a lot of opportunities. These include lower interest rates and higher credits.
The business credit score’s scale ranges from 0-100.0 for Experian. In this scale, scores close to zero denote bad credit repayment behavior. While 100 denotes the lowest financial risk and reflects good credit repayment behavior. Hence, the primary goal is to be as close to 100 as possible.
But, several factors can negatively affect that goal and your business credit score. These include erroneous reports, late payments, high card spending, etc. You’ll need to engage with creditors, suppliers, and credit reporting companies to address some of these factors. Affordable credit repair services can save you the hassle and prop up your score without exhausting your last dime.
How to Repair Your Business Credit Card Score at Low Cost
1. Correct and Dispute Any Errors
Credit bureaus and rating agencies can also be prone to mistakes and errors. Check out your business credit report from Experian, Equifax, Dun & Bradstreet, etc and identify any errors.
Your company’s file data must be current and accurate. If anything is out of the norm on the report, call it in and lodge a dispute. You can engage credit card companies and rating agencies to delete any erroneous data in your file.
Here is how to go about it;
- Write a dispute letter to the credit bureau, rating agency, and credit card company on any error you notice.
- Request correction notices if your dispute is successful.
- Request the inclusion of your dispute statement in the file for future reference. It can help seek the deletion of data you believe is an error.
Seeking and fixing errors on your business credit report is a critical part of improving your score. You only need to be keen on details and report any errors in writing to credit companies and credit reporting agencies.
If evaluating and lodging disputes is overwhelming, affordable credit repair services can be helpful.
2. Be Open With Your Creditors
Being honest and transparent with your creditors can be helpful. You can reach out to them directly and talk about repayment options. They can change the payment terms, suspend accounts, or advance creative settlements.
If you’re genuinely putting the effort to repay your loan, your creditors can come forward to work with you. It can help save on some costs and bad ratings. And it doesn’t cost to be transparent.
3. Clear Your Bills on Time
Your credit score is significantly affected by your payment history. That said, you can resolve your poor score by making prompt monthly payments. If it’s overwhelming to keep tabs on all your monthly bills, you can automate their payments.
You can use Paypal, Stripe, and other bill management solutions. For one-off bills that are blocked from the platforms, strive to clear them as fast as you get them.
If you cannot make prompt payment, call the company up and work out a payment arrangement.
Also, set a maximum amount to avoid overdrawing your credit card account. It only takes better time management. So you don’t have to spend extra dollars to be punctual with your monthly payments.
4. Reduce Your Credit Utilization Ratio
Apart from payment history, your credit utilization ratio is critical in your credit score. The ratio denotes the amount of used credit compared to the credit card’s limit. It is better to keep the ratio above zero but below 30%.
The cheapest way to keep your credit utilization below 30% is by reducing your card spending. Avoid unnecessary expenditure using your business cards.
5. Avoid New Credit if Possible
Taking more credit can lower your score further. Although it can help you reduce your credit utilization ratio, it can be harmful in some ways. For example, for every line of credit your business requests, the creditor runs a hard check that drops your score by 5 points.
Despite being a temporary drop, it affects your score nonetheless. Also, it affects the age of your credit history that accounts for 15% of your credit score. So, if possible, avoid a new business credit to protect your credit score.
Although it costs nothing to avoid new credit, it may mean loss of business opportunities to you. But, it may even be harder to achieve those goals on a negatively battered credit score due to additional credit.
Take Away
You can still improve your business credit score to meet your business goals. Several factors can batter businesses, including the pandemic. It can affect your business credit score in the process, limiting your business goals through affordable loans.
You can conduct a credit fix by yourself through these relatively cheap tips. Additionally, you can seek more credit repair hacks to successfully improve your credit score. But, if it is tedious, opt for top-rated credit repair services to help you achieve the perfect credit score.
We recommend going for affordable credit repair services to avoid unnecessary spending.
