Top 3 Ways to Build Your Credit

Building and maintaining your business credit is crucial to the health of every company. Improving your credit to get better terms or larger approvals doesn’t have to be an uphill battle. Follow these three rules so you can build your credit fast and make your business more trustworthy to work with.

No Late Payments

Remember that your credit is essentially a measurement of your trustworthiness when it comes to paying creditors back. A late payment diminishes that trust, and shows that you are a risky person to lend money to because you have an issue paying on time.

Avoid any type of late payment. A late payment will be reported if you pass the 30 day mark, but don’t let the illusion of a grace period fool you. Don’t get into the habit of making late payments because it will ding your credit and the adverse affects roll downhill from there.
To avoid late payments, set up email or text reminders, or set up reminders in your personal calendar. Another option is to sign up for automatic payments so you never have to worry about missing a date. However, if you pay off your entire amount every month (which is also highly recommended) be sure that you have enough funds in your account so you don’t end up being charged an overdraft fee or ruining your cash flow. Remember that you have the power to choose what your payment date will be, so make it a date when you know you have more funds in your account or when you’re more likely to remember to pay your bill.

Lower your Credit Utilization

Simply put, don’t use more than 20 percent of the credit available to you. Paying off large sums owed (or even beginning to) will greatly increase your credit score. Ridding yourself of debt lowers your credit utilization which indicates that you’re more likely to be able to pay your bills on time. Keep in mind that your credit utilization is an important factor in determining your credit score. Anything above 30 percent utilization could begin to lower it. If you need more lines of credit to prevent over utilizing your current account, do so as long as you are able to pay both lines off on time.

Pay Twice a Billing Cycle

This ties our previous two tips together. By paying down your expenses twice a month you’ll ensure there are no late payments, while simultaneously lowering your credit utilization. This is how everything ties together to help you build credit. Paying twice a cycle shows that you are aware of your expenses and that you watch what you borrow. It also creates the healthy habits of watching your monthly (and bi-weekly) expenditure so you can better manage your spending habits.