5 things that won’t hurt your business credit score

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Your business credit score is an important lifeline if you ever need to borrow funds. If you have a business credit card or any business loans, you may have a business credit score and not even know it.

Building a great business credit score takes time, but there are many misconceptions on what may harm your business credit score. Here are some actions you can take that won’t hurt your business credit score.

Image Credit: DepositPhotos.com.

1. Keeping your business credit card open.

One of the factors that the major business credit bureaus use to calculate your business credit score is the age of business borrowing accounts. If you only have one business credit card and just opened it recently, you don’t have a long history that shows you are a responsible borrower. However, if you have had a card open and in good standing for years, you are showing the credit bureaus that you can responsibly manage your business finances.

Keeping that card open for a long time is a great idea to build your business credit. Just keep in mind that opening a brand-new account can temporarily lower your score because of the credit inquiry. If you make your monthly payments on time and keep that utilization low (under 30% is great, under 10% is best), your score can benefit in the long run.

Image Credit: DepositPhotos.com.

2. Paying off your business credit card.

If you have big outstanding balances, particularly on revolving credit accounts like a credit card or business line of credit, you may seem overextended to a lender. Lenders might look at this as a reason to turn down a business loan or credit card application, so this behavior lowers your credit score.

Keeping your revolving credit balances below 30% of your available credit is a good habit. Low balances show you are a responsible borrower. Contrary to popular myth, you don’t have to use your card every month or carry a balance to have a good business credit score.

Image Credit: DepositPhotos.com.

3. Earning more money.

Lenders use a combination of your business credit score, business revenue, cash flow and other factors to decide whether to approve you for a business loan.

Plus, earning more helps you avoid the types of issues that lead to tax liens, collections, bankruptcies, judgements and other negative information. But let’s get real, you already know you want to earn more money. That’s the entire reason most people go into business!

Image Credit: DepositPhotos.com.

4. Paying your vendors on time.

Depending on your industry, you may have vendors that sell you good or services on credit expecting payment at a later date. Pay those vendors late and you could be damaging your business credit score, depending on whether those vendors report to the late payment to a business credit bureau. But paying your invoices on time each month can do a lot to build a great business credit score. For example, the Dun & Bradstreet Paydex score looks solely at your interactions with vendors and suppliers. A perfect Paydex score is only awarded to businesses who consistently pay 30 days before terms are due, but you can still get a good score by “just” paying these invoices on time.

Image Credit: DepositPhotos.com.

5. Checking your own business credit score.

When a lender checks your credit score for a loan, it may show up on your business credit report as an inquiry. Hard inquiries can slightly lower your credit score. Checking your business score yourself is considered a soft inquiry and does not impact your credit score. If you don’t know your business credit score, it’s time to fix that. You can check your score for free at Nav.com.

This article originally appeared on Nav.com and was syndicated by MediaFeed.org.

Image Credit: DepositPhotos.com.

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