Commercial Credit Score Basics: What is It and How Can You Boost It?

Monday, January 16, 2017, 6:00 AM | Leave Comment

If you are running a business, you are sure to have come across many difficulties.

With the current climate of uncertainty in the fast-paced business world, it takes a lot of effort and caution to build a reputable, successful company.

So, what exactly is a commercial credit score? It is, in layman’s terms – that same reputation, only seen through a mathematical formula. Trade, or commercial credit score is calculated based on several parameters. It is used more and more to assess the financial stability of a company.

To put it simply, it’s what potential partners and investors look at to determine whether it’s safe to do business with you.

A good credit score also improves your chances to access cash, lower your insurance premiums and get loans with better interest rates and overall terms.

With all those great benefits, your credit score seems like something worth improving. But how can you achieve that?

Here are some ways to do it.

Commercial Credit Score Basics2

  • Find out your score

    First things first: to be able to improve your score, you first need to know what it is.

    Your score is basically a number signifying how likely your company is to pay its debts on time.

    The lower the score, the bigger the risk of a company being severely late with payments, or even closing shop without paying their creditors.

    It’s not hard to obtain your credit score online. It might be fine already, but there is always room for improvement. You never know which business endeavours may influence your score, so it’s best to check regularly and act accordingly.

    There are a few big credit scoring companies that all use slightly different methods. However, regardless of the method, you want your score to be as high as possible.

  • Be responsible with your payments

    It sounds simple, but this is truly the biggest factor in your credit score. Since the score is used to assess the risk of your company not paying its debts on time, the biggest boost you could give it is to establish a history of timely payments.

    Don’t bite off more than you can chew, only to find yourself in a dire situation with no means to pay your debts.

    Make a payment plan, so that you always know where the money for your next payment is coming from, and when exactly is it due.

    Credit scoring companies mark your payment performance trend, and optimally you want it to be steady or improving.

  • Commercial Credit Score Basics1

  • Consider debt consolidation

    Starting and running a company is no easy task. Most entrepreneurs need a cash injection to start their business, and then other smaller loans to keep it running, and eventually grow.

    While loans are a natural part of doing business, having many loans, with varying interest rates is not only highly inconvenient, it can lead to missed payments and negatively influence your credit score.

    Most experts, like the ones from the Australian Lending Centre agree that when you are burdened by several loans, it is in your best interest to look into debt consolidation.

    Combining multiple debts into one will not only be easier to handle, but will also look better and affect your score less.

By boosting your company’s reputation, and establishing it as a responsible and reliable partner, you will succeed in boosting its commercial credit score.

Your trustworthiness will pay off in the long run: not only will you be able to reap the many benefits of your high credit score, your brilliant reputation will help you keep old, satisfied clients and partners, and attract new ones.

See also Dun & Bradstreet Credit Report.

Author BIO

Dan Radak is a marketing professional with ten years of experience. He is a coauthor on several websites and regular contributor to BizzMark Blog. Currently, he is working with a number of companies in the field of digital marketing, closely collaborating with a couple of e-commerce companies.

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