5 Tips To Improve Your Credit Score

Your credit score is not the only factor in eligibility for a U.S. Small Business Administration (SBA) loan, but it is an important one! If you are thinking about applying for an SBA loan, consider these 5 tips to improve your credit score so your business is ready when it is time to apply.

At Business Funding Group (BFG) LLC, we help profitable small businesses secure SBA financing, and we do not charge a single fee unless the loan is closed. We connect you with SBA lenders in our network, who look for credit scores of at least 700. They also look at your personal and business credit history, debt-to-income ratio, and payment history.

If your score is not where it needs to be, do not worry! Credit scores can improve.

1. Make On-Time Payments

Payment history has the biggest impact on your credit score. It makes up 35% of your personal FICO score.

A single late payment could affect your score for years. Being consistent with payments is one of the fastest ways to raise your credit score. Set up auto pay or reminders, or delegate it to avoid missing any more payments. Some lenders may remove late marks if you catch up quickly. If you fall behind, call your lender right away.

2. Reduce Debt Utilization

Your credit utilization ratio compares how much you owe to how much you could borrow. The lower, the better! For example, if you have a $10,000 credit limit and carry a $7,000 balance, your utilization is 70%, too high! Even if you pay on time, high balances may damage your score.

To build your credit score for SBA loan readiness, pay down existing credit card debt, ask for a credit limit increase (but avoid spending more), and do not close old cards.

3. Keep Business and Personal Credit Separate

Although SBA lenders check your personal credit, it is wise to start building strong business credit, too.

This matters because business credit shows vendors and lenders your company’s financial reputation, and it is another factor lenders will review when approving your SBA loan.

To build your business credit score, you should get an EIN and register your business, open accounts with vendors that report to credit bureaus, and use a business credit card and pay it off each month.

4. Dispute Errors on Your Credit Report

Credit reports often contain errors. This could include wrong account balances, false late payments, and even accounts that do not belong to you.

You can dispute these easily by requesting your credit report, highlighting mistakes, and filing a dispute online or by mail, and following up to ensure credit bureaus respond within 30 days. One correction could improve your credit score.

5. Avoid Opening or Closing Too Many Accounts at Once

Each time you apply for credit, it triggers a hard inquiry, which can lower your score, especially if done repeatedly in a short time. Closing old accounts reduces your total available credit and shortens your credit history. Both can decrease your score.

What can you do? Keep older accounts open, especially if they are in good standing. You can also space out credit applications and focus on effectively managing the credit you have. Improving your credit does not always mean doing more. Sometimes it means doing less, with strategy.

Call Us To Discuss Five Ways To Increase Your Credit Score Before Applying for a Loan

Follow these 5 tips to improve your credit score if you are preparing to apply for an SBA loan. A higher score means more options, faster approval, and better terms.

BFG specializes in SBA loan packaging for established businesses, and we only get paid when your loan closes. Contact us today to see if you qualify or want to find out which credit moves matter most for your situation. We can guide you through the SBA requirements and ensure your loan application is in the best possible condition. Check our fast and simple online application to estimate loan amounts.