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There are many obligations that come with the setting up and running of any successful business. One of the things that is most important is maintaining good business credit. A good credit report is important to indicate that your business can manage its finances well. This increases your chance to secure business finance.


What Is a Business Credit Score? 

This is a figure that credit agencies calculate. A credit agency is a business that exists to collect business information. This information is then provided to banks and other lending institutions. Credit agencies have a point system that applies points to the pieces of information they collect. The points are then combined to give a business’ credit score. This is then used by banks and lending institutions to determine the extent to which a business can repay a loan. This is based on the business’ financial activity in the past.


What Is a Good Credit Score and How Is It Calculated?

Credit agencies use different means and formulas to determine your credit score. Therefore, you may notice that your score is different depending on the agency you use. As credit scores use different scales, there is no number that is universally accepted as the best possible score. To give an example, some agencies have a score range that ends at 1000, while some others only go up to 700. While the number differs, the general rule is that the closer a score is to the maximum number, the better it is.

To calculate a credit score, agencies use various pieces of financial information that they can access on-demand. This information includes:

  • County court judgments
  • Orders of bankruptcy
  • Trade credit information
  • Leasing and finance companies
  • Telecom and utility payment history
  • People you share lending agreements or bank accounts with


How to Check My Business’ Credit Score

 There are free avenues that you can use to do a credit check. Agencies such as Equifax and Experian offer this service. After receiving your credit score, remember to check the scale that is being used as this helps you to understand it. Once the financial health of your business is good, the score should follow suit.


How to Maintain Good Credit

Now that you understand the importance of a good credit score and how it is calculated, the next step is understanding how to maintain one. Below is a list of three of the best ways to ensure your credit score is as high as is possible.

  1. Pay bills on time – If you wish to improve or maintain your score, you can effectively do so by ensuring that your bills are paid on time. Paying them early is an even better way to do so. This is an indication of good financial habits, and it also demonstrates a level of reliability where the paying of business expenses is concerned.
  2. Cover daily expenses with your business’ credit card – Credit agencies heavily use credit card reports to track how your business spends money. It also helps them to understand the position that you are in to pay it back. Once you pay at least the minimum payment monthly and maintain a low expenditure in comparison to your credit limit, it can provide a great boost to your score.
  3. Stay on top of your personal credit score – Regardless of how long your business has been operating, many lenders also look at your personal credit score. Managing business finance and cash flow is made much easier when your personal finances are kept separate from those of the business. While this separation is recommended, your personal credit score should also be well maintained as it increases your chance of acceptance for business finance.



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