10 tips for small businesses to improve their credit score


📢 According to a 2020 survey by Home Credit India, 68% of borrowers were not aware of their credit score 🤔. The study stated that as many as 76% of the borrowers did not even know the interest amount on their loans 🧐. Banks and Non-Banking Financial Companies (NBFCs) check the credit score of your business to decide whether to offer you loans ☑️ or not ❌. It is important for entrepreneurs to check and maintain a good company credit score. It is beneficial to your business in several ways📈. 

Establishing a strong credit history takes some time, but the payoffs are worth the effort. In this article, we’ll discuss 10 tips to improve your company’s credit score over time. ⚡️

💡10 ways to improve your company’s credit score

Improving your credit score will not happen overnight. Neither there is a simple or a definite way to achieve this. However, while this might take time, it’s not difficult to do. We advise you to make a long term commitment to planning your finances and the results will show eventually. ⏳

By providing accurate information, following best practices of financial management and regular monitoring, you can begin to build a strong credit score 🙂. It’s important to include these habits into your normal finance routines and systems so that they become a regular part of how you operate ➕. Over time, you’ll see your credit score starts to improve.  📈

⚡️Here are our top tips to help you start building a favourable company credit score:

10 tips to improve your company’s credit score

  1. Monitor your credit score regularly and sign up for alerts. These will notify you when your credit record changes or is searched. 🔎
  2. Sometimes credit reports can contain mistakes so checking the report carefully is a must. It will help you to report any incorrect information and dispute it with the credit bureau.🧐
  3. Take care of your cash flow 💵. If you run out of money and miss payment deadlines, your credit score will decrease. Making payments on time is the easiest way to improve your credit score. You can consider accounting tools to help you streamline your invoice payment and stay on top of your accounts receivable.

💡Pro Tip: A great place to start managing cash flow is within your employee expenses. By creating clear rules and guidelines, you can lower your cash burn, avoid tax season surprises and effectively monitor your cash flow.

  1. You should encourage your vendors and suppliers to share data on your good payment history with Credit Rating Agencies (CRAs) to help improve your score 🗣. The more timely payments you can show, the better.
  2. Consider getting a business credit card. A business credit card can be pivotal to small businesses trying to get off the ground. They also come with travel and expense management rewards. If you can forecast a reliable cash flow, paying credit card bills on time is a great way to improve your credit score. 🧾
  3. Don’t close old unused credit accounts. Closing an old account can impact your company credit score negatively. 🚨
  4. Carefully manage your personal finances. When you are just starting out or have a small enterprise, your individual credit score may be used in place of your company credit score  to determine creditworthiness. 👀
  5. Restrict the number of credit applications you make at a time. Too many applications in a short period may lead to multiple credit enquiries on your business, which are then recorded in  your credit report. This can make it appear like you are struggling to secure funding and it lowers your credit score. 😓
  6. Pay attention to your credit utilisation ratio.This can be calculated by dividing the amount of credit used vs amount of credit available on all revolving credit lines. A utilisation ratio of 30% or less is ideal and indicates responsible usage of credit. 🤔
  7. If you don’t have a business credit history or have a thin credit file, you should consider getting a small business loan or business credit card to help create credit history. Make sure and pay these loans and credit cards on time once these credit accounts are open. 👍

💡 Pro Tip: New and small business owners can plan for future growth by focusing on building their credit score now. 

Wrapping up

Based on your business, you can pick and choose a few of these tips. These will help you prioritise in the short-term and in the long-term and make progress on each of these points. Over time, you’ll begin to see your company credit score shift for the better.

This is the second blog in our series of articles focused on company credit score. Catch our previous blog that highlights 6 important things to know about company credit score. 👈👀

Stay tuned for the next blog in the series 🚨. In the upcoming blog we will explain the difference between your personal credit score and your company’s credit score. 👍

Disclaimer – Tide and its affiliates do not provide credit related advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for improving credit score . You should consult your own credit experts and advisors for all credit related purposes. © Copyright 2022. All rights reserved. Tide Platform Private Limited.

Pallavi Gupta

Pallavi Gupta

Senior Partnerships Manager, Credit Services

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