If you check your rating and find that there’s room for improvement, there are several ways you can do it, just keep in mind that your business credit score is different to your personal credit score. Any financial products taken out in your personal name will count towards your personal credit rating. So, if you’re trying to increase your business credit rating, be sure the accounts you’re paying are in the business name.
Here are some tips to improve your credit score:
Paying all your bills in full, on time
One of the main reasons business credit scores aren’t as good as they could be is that you may have made late repayments in the past. Late repayments damage your credit score because they are usually reported to credit reporting agencies who record it against your business credit report, especially if any legal action is involved.
Clearing up any tax debts if you have any
Any debt to the Australian Taxation Office can seriously damage your business’ credit rating. Again, make sure you pay all your business tax obligations in full and on time. This includes taxes like GST, PAYG and company tax.
Creating a healthy debt level
The more debt your business has, the more of a risk you will be perceived as being. This higher risk will be reflected in a lower credit rating.
Try to maintain a healthy level of debt instead of going into too much debt. A general rule of thumb is that your current level of debt should be no more than half of your liquid assets.
Not making multiple, unsuccessful finance applications
Every finance or loan application you make is listed on your credit file and impacts your score. So don’t make the mistake of applying to multiple lenders if you get knocked back. Each rejection will harm your score.
Reducing your business credit limits
This includes your credit limits on bank overdraft facilities and credit cards. Any credit limits that you have will be assessed as being used in full for the purposes of calculating your score, so the lower your limits are, the better.
As you can see, there are plenty of steps you can take to improve your business credit score. Once you do, make sure you maintain it so that you can always get the finance your business needs on the best possible terms and conditions.