Understanding and Improving Your Business's Credit Score

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Understanding and Improving Your Business's Credit Score

How many business owners actually know their business's credit score? 

You might be surprised to learn that a significant number of business owners are unaware of their business's credit score. According to a 2023 survey by Nav, a leading business financial health platform, only 45% of small business owners know their business credit score. This statistic is concerning, considering the critical role that a credit score plays in the financial health and growth potential of a business. Building a strong business credit score can take a significant amount of time, making it even more crucial to understand and manage it proactively. 

Why is it important to know your business's credit score? 

Understanding your business's credit score is crucial for several reasons: 

  1. Access to Financing: A good credit score opens doors to various financing options, including loans and lines of credit, with favorable terms. This can be the lifeline your business needs for expansion, managing cash flow, or navigating unexpected expenses. 
  2. Negotiating Power: Suppliers and vendors often check your credit score before agreeing to payment terms. A strong credit score can help you negotiate better payment terms and lower interest rates, improving your cash flow and reducing costs. 
  3. Business Opportunities: Some potential partners or clients may assess your business's creditworthiness before entering into contracts or partnerships. A robust credit score can enhance your business's reputation and credibility. 
  4. Risk Management: Regularly monitoring your credit score helps you identify and address potential issues early, mitigating risks that could impact your business’s financial health. 

Proven ways to improve your business's credit score 

Improving your business's credit score is not an overnight process, but with consistent effort and strategic actions, you can see significant improvements. Here are some proven ways to enhance your business credit score: 

  1. Pay Bills on Time: Timely payment of bills is one of the most critical factors affecting your credit score. Ensure all invoices, loans, and credit lines are paid on or before the due date. 
  2. Reduce Debt Levels: High levels of debt can negatively impact your credit score. Aim to pay down outstanding debts and avoid taking on unnecessary new debt. This demonstrates responsible credit management. 
  3. Monitor Your Credit Report: Regularly check your business credit report for errors or discrepancies. If you find any, dispute them promptly. According to the SBA, about 20% of businesses have errors on their credit reports that can lower their scores. 
  4. Establish Credit Accounts with Suppliers: Building relationships with suppliers who report to credit bureaus can positively impact your credit score. Ensure these accounts are managed well and paid promptly. 
  5. Diversify Credit Mix: Having a mix of credit types, such as credit cards, loans, and lines of credit, can improve your credit score. This demonstrates that you can handle various types of credit responsibly. 
  6. Limit Credit Inquiries: Each credit inquiry can slightly lower your score. Be strategic about applying for new credit and avoid frequent credit applications. 

By following these steps, you can gradually build and maintain a strong business credit score, positioning your business for better financial opportunities and stability. 

How aqeel can help you improve your business's credit score 

At aqeel, we understand the importance of a strong business credit score and are committed to helping you improve it. We work closely with credit agencies, and every time you repay aqeel on time, we report this positive activity to the agencies, which directly contributes to improving your business credit score. By making use of our Payment Extension product and repaying on time, you demonstrate financial responsibility and good credit management. aqeel reports each on-time repayment to the credit agencies, enhancing your business's creditworthiness over time. 

Moreover, our Early Pay (factoring) product offers a unique advantage. Unlike traditional loans, factoring is not considered debt and therefore does not add to your balance sheet liabilities. This means you can access the financing you need to manage cash flow and grow your business without increasing your debt burden. Additionally, by working with us and consistently using our factoring services, you can demonstrate sound financial practices and a reliable cash flow. aqeel reports these factoring transactions to the credit agencies, which can positively impact and improve your credit score. 

By partnering with aqeel, you gain access to a financing solution that supports your business's financial health and credit profile. We can help accelerate building a good business credit score, enabling you to unlock new opportunities for your business's future. 

For more information on how aqeel can assist you, visit our website or contact our support team today at hello@getaqeel.com.