How to Check My Business Credit Score
As a business owner, it’s essential to stay on top of your company’s financial health. One of the critical aspects of assessing your financial standing is your business credit score. A good credit score not only allows you to access credit and loans, but it also impacts your business’s ability to secure favorable terms.
In this article, we’ll explore the steps you need to take to check your business credit score, ways to evaluate it, identify errors, and improve it for long-term financial sustainability.
Obtain a Free Credit Report
The first step in checking your business credit score is requesting a free credit report from credit reporting agencies.
Two primary credit bureaus collect and report business credit data – Dun & Bradstreet and Experian Business. To access your credit reports and information, visit the company’s website and fill out the necessary forms, including basic details about your business such as name, address, and tax ID number.
Alternatively, you can use third-party websites like Nav and CreditSignal, which offer crucial credit reporting and monitoring services. These sites offer streamlined reports, while also providing actionable insights and recommendations on how to improve your credit score.
You should review your credit reports regularly to ensure that your business information is accurate and up to date.
Check for Errors
Once you have access to your credit reports, carefully review them for any inaccuracies.
The most common errors found on a credit report include incorrect information about the business name or address, incomplete data, outdated information, and accounts that are not yours. Inaccurate reports may result in unfavorable loan terms, high-interest rates, or declined credit applications.
It is also advisable to take note of any open accounts with high utilization rates, long overdue payments, charge-offs, or legal judgments, as these can significantly lower your credit score.
If you find any errors, contact the credit bureau that reported the information immediately. Most credit bureaus provide dispute resolution options within their websites. You can dispute the report online, provide documentary support to correct the information, and monitor the updates in real-time.
Evaluate Credit Score
Your business credit score determines your creditworthiness to potential lenders and creditors. A credit score is a numeric representation of your financial health and creditworthiness. Typically, credit scores range from 0 to 100 for Dun & Bradstreet and 0 to 1000 for Experian Business.
Most lenders require credit scores of 75 or above to extend favorable credit terms, while scores of 50-74 are deemed a moderate risk. Scores below 50 signal significant risks in your business’s creditworthiness and may result in loan denials.
Your credit score provides valuable information about your credit utilization ratio, payment history, credit inquiries, and other relevant data. A thorough review of your credit score report will help you understand where your business stands and how you can improve.
Improve Credit Score
One of the most important aspects of maintaining a healthy credit score is ensuring that you are following credit-friendly practices.
Using credit responsibly and managing it correctly can go a long way in improving your credit score. Some of the practices for maintaining a good credit score include:
- Reducing your credit utilization ratio to below 30%
- Ensuring timely payments of all your debts
- Do not cancel old credit accounts unnecessarily
- Monitoring your credit reports and dispute errors immediately
- Avoid over-relying on credit to operate your business
You should also focus on strategies to improve your credit score over the long-term. Set realistic financial objectives, minimize your level of credit risk, and keep loan repayments on time to boost your credit score.
Monitoring Credit Score
As mentioned earlier, it is essential to review your credit score regularly. Most credit bureaus offer online tools to track your credit score, and some provide regular alerts when there are significant changes in your credit report.
It’s advisable to check your credit score at least once every few months. A regular credit score check can help you detect any errors, observe changes in your business credit scoring, and make plans to improve your score if necessary.
Wrap-up & Concluding Thoughts
Checking your business credit score should be a regular practice for every business owner. By obtaining a credit report, checking for errors, evaluating your credit score, and implementing strategies to improve it, you can enhance your business’s financial health and ensure its successful future.
Remember to keep track of all open and available credit options, and use them judiciously. Keep track of due dates and payments to avoid late payment penalties and interest fees whenever possible.
A good credit score allows you to secure favorable loan terms, better cash flow, and enhances your competitive advantage.
