Your Small Business Credit Score
The vast majority of the world’s wealth is generated by small businesses. They’re located on every continent and in every nation, and are involved in nearly every imaginable human activity from farming to manufacturing to providing services. To start a small business and succeed is challenging, but the rewards can be significant.
Success in small business requires growth. If you do not grow, you will not stay in business very long. Growth requires cash and a steadily increasing level of commercial activity. One of the foundations of growth is credit—if you can get it and how safely you can extend it. How much credit is available to you may depend on your small business credit score. For example, online credit reports from Credit Risk Manager contain a wealth of information, including a credit score, the Graydon Rating.
What Is Your Small Business Credit Score?
There are two primary reasons why your small business will need access to credit. The first is to get a loan or a line of credit from a bank or other lending institution. The second is to purchase supplies or goods from another business on credit. In both cases, you are being given something of value that you promise to repay in the future in cash.
But who will be willing to extend credit to your small business? Your relatives might, because they know you. But how about a bank across town, or a supplier in a foreign country ten thousand miles away? How can they evaluate your creditworthiness?
They do what you would do: they get your credit report from a reputable credit risk management agency. A comprehensive small business credit report is a detailed look at nearly every facet of your business including your financial condition, credit history, top management, and much more. But what it all comes down to is your small business credit score. That one number that sums it all up and tells a potential lender that you are a good credit risk. Your credit score is generally a number (the scale could be 1-100, or 1-5), or could include letters of the alphabet (such as A, B, C, or D). Your credit score helps supplies, lenders, banks, and other creditors quickly evaluate whether you are likely to pay your bills on time.
How to Improve Your Business Credit Score
Your small business credit score is a complex statistical model for predicting credit risk. The score is created by credit risk management agencies like Credit Risk Manager, that collect data from a wide variety of sources. This data is then filtered and cross-checked, and presented in an easy-to-read format. While there is no guaranteed way to improve your small business credit score, you can take steps to ensure that your credit report reflects the best score possible for your company.
- Pay your creditors and your bills on time. Your payment history with previous creditors is a major factor in calculating your small business credit score.
- Check your business credit report on a regular basis. Verify that the information in it is accurate and up-to-date. You cannot delete negative information that is accurate, but you can have mistakes corrected.
- Credit risk management agencies receive trade data from companies. Since not every business creditor reports their trade information, it pays to establish credit with companies that report trades.
Your business credit score is dynamic, and changes over time. If you stay aware of your small business credit score, you’ll be one step ahead of the competition.
You can check a small business credit score with just three clicks. Simply enter the company's name as well as the country and the city it is based in to get quick and easy access to reliable business information from Credit Risk Manager.