Stop Doing These Mistakes When Establishing Business Credit Score

By Author: Lorenzo Rodriguez
Total Articles: 6
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To avoid these bad impacts on your business credit reports, learn about them in this article.

Four Common Mistakes Companies Do While Building Business Credit

1. Paying Off and Closing A Credit Card

Paying your financial loans should positively affect your credit score. But be cautious when shutting down a business bank card that is in good standing up. This could lead to dropping some points in your credit score. Why? When you shut down a company credit card, you will be also dropping its available credit limitations. For that reason, it could harm your business utilization rate and decrease your company's credit rating downward.

2. Getting More than One Bank Cards

Acquiring multiple bank cards gives your business more credit limits and the ability to purchase more supplies and equipment. You can take advantage of the incentives, cashbacks, and low-interest introductory rates as a new customer. Unfortunately, this can be a terrible idea if you are planning to apply for multiple business cards in a short time. Each credit card application will result in hard inquiry in your business account ...
... and will leave a bad impact on your business credit history.

3. Not Maintaining a Credit Utilization Rate Below 30%

The credit utilization ratio (CUR) is an important aspect of credit standing. When you are serious about building excellent business credit, it is strongly recommended to maintain your usage rate below 30%. A high utilization rate is a big factor that can decrease credit scores.

4. Delayed Bills Payment

Aside from late payments that can dramatically reduce a business credit score, its remarks will remain in credit history for 7 years. This can discourage lenders to approve loans as it indicates the company isn't capable of paying bills on time.

In addition to the four tips not to ignore when building business credit, monitoring credit reports should also be very important. It allows you to monitor your progress, whether your efforts are paying off, and to quickly correct any wrong information that may occur in your business credit reports.

To make business credit building easy, many companies relies on business credit builder. A software that allows them to have a checklist on building credit, connect to vendors and supplies, reminds them of their due date, and monitor their credit score. Check out https://bc.software to learn more about business credit builder software.