30 January 2024

Boost Your Small Business’s FICO Score: 12 Essential Facts You Need to Know

By Ronald Smith

Are you a small business owner looking to improve your FICO score? Well, you’ve come to the right place! In this article, I’ll share 12 crucial things you should know to help boost your business’s credit score. So let’s dive right in!

First things first, what exactly is a FICO score? It’s a number that gives lenders an idea of how creditworthy you are as a business. A higher score means you’re more likely to receive favorable loan terms and interest rates.

Now, you might be wondering, How can I improve my small business’s FICO score? Don’t worry, I’ve got you covered. Here are 12 important tips to get you on the right track:

  1. Pay your bills on time: Making timely payments shows lenders that you’re responsible and reliable.
  2. Keep your credit utilization low: Aim to use only a small percentage of your available credit to demonstrate financial stability.
  3. Monitor your credit: Regularly check your credit reports to catch any errors or fraudulent activity.
  4. Diversify your credit mix: Having a variety of credit types, like loans and credit cards, shows that you can handle different financial responsibilities.
  5. Limit new credit: Opening too many new credit accounts can raise red flags for lenders.
  6. Build a solid payment history: Consistently paying your bills on time over a long period of time will boost your credit score.
  7. Reduce your debt: Paying down your existing debts shows lenders that you have a handle on your financial obligations.
  8. Don’t close old accounts: Keeping your oldest credit accounts open demonstrates a longer credit history, which is seen as a positive factor.
  9. Limit credit inquiries: Applying for multiple credit accounts within a short period of time can hurt your credit score.
  10. Work with trustworthy lenders: Establishing relationships with reputable lenders can help improve your creditworthiness.
  11. Communicate with your creditors: If you’re facing financial difficulties, reach out to your lenders to discuss potential solutions.
  12. Be patient: Improving your credit score takes time and consistent effort, so stay positive and focused on your goals.

By following these tips, you’ll be on your way to boosting your small business’s FICO score. Remember, a healthy credit score opens up opportunities for growth and financial success. Good luck!

Boost Your Small Business's FICO Score: 12 Essential Facts You Need to Know

I have some exciting news for small businesses like you. Did you know that your FICO score can help you get loans? It’s true! But there’s more to it than that. I recently attended a webinar called Financial Innovation and FICO Score: What Does it Mean for Small Business where they explained everything you need to know about your FICO score and how to improve it.

How to Boost Your FICO Score

Want to improve your FICO score? Here are 10 things you can do as a small business owner. Just remember, a good FICO score falls between 750 and over 800, so aim for that range. A score of 250 won’t cut it!

Understanding what’s included in your FICO Score

When calculating your FICO score, they look at your repayment history. That means they check how well you’ve been paying back money you borrowed. They also take into account any collections and hard credit inquiries on your record.

Focusing on what’s not included

It’s important to know what doesn’t affect your FICO score: things like your age, address, employment, income, and gender. These factors don’t play a role in determining your score.

You know what? A lot of people think that how much money you make is a big deal when it comes to your credit score, I said, repeating what Joanne Gaskin, the Vice President of Scores and Analytics at FICO, once said.

So, here’s the deal:

The higher your credit score, the better. It means you’re less risky to lend money to, which means you can qualify for more money. And get this – your industry also affects your score. It can go as high as 900!

Wait, there’s more:

If you happen to work in certain industries like mortgage loans, credit card businesses, or the auto industry, you have a better chance of getting a higher score. Pretty cool, right?

Now, pay attention to this:

Your credit card debt matters too. FICO takes a close look at how much of your credit limit you’re using. And get this – they don’t just look at one card, they look at all of your credit cards combined. So be smart about managing your credit!

Let’s talk about how to keep your business spending in check and improve your credit score. It’s important to stay well below the spending limits and make more than just the minimum payments.

Keep an Eye on Your Installment Loans

As a small business owner or sole proprietor, you may have multiple loans to pay off. For example, you might have a mortgage for your home business. Paying down these loans will help boost your credit score.

Be Cautious About Opening Too Many New Accounts

Did you know that the length of time an account has been open affects your credit score? It’s true! So, try not to open a bunch of new credit accounts all at once, even though it might be tempting when you’re starting out. Opening too many accounts could actually harm your credit rating.

Consider Your Credit Mix

Lenders take a look at all the loans you have. It’s a good idea to have a mix of different types of loans. This shows that you can manage different kinds of debt responsibly and helps improve your FICO credit score.

Fix Any Errors

So, sometimes, that credit report of yours might have a few mistakes. Don’t worry, it’s not your fault. Even credit bureaus make errors sometimes. That’s why it’s crucial to ensure they fix any outdated or incorrect information for you.

Give the FICO Small Business Scoring Service a Shot

Now, this neat tool I’m about to tell you about actually speeds up the approval process. It’s like magic! Plus, it provides a scoring model that lenders can use to make faster decisions. And guess what? It’s all in the cloud! Pretty cool, huh? But don’t forget, you should still follow those other tips I mentioned earlier to improve your credit score. Then, use this fancy SBSS tool to make things even speedier.

Make the Most of the UltraFICO Score

Listen up! If you’re someone who doesn’t have enough credit history to get a regular FICO score, this tool is perfect for you. It’s specially designed for the 53 million consumers out there who don’t have a credit score. Right now, it’s still in the pilot phase, but the folks behind it expect a full launch by the end of the year. Exciting, right?

Get to Know How the Score Works

If you’re a millennial small business owner or a recent immigrant, here’s some great news for you. You have the opportunity to benefit from this amazing option – the UltraFICO Score. This score can help you gain more access to credit and open up new possibilities for your financial future.

Here’s a Key Fact to Remember

There’s one important statistic about your FICO score that you should always keep in mind. It will help you understand why it’s crucial to take your score seriously and work towards improving it.

Did you know that over 90% of lenders base their credit decisions on these scores? stated Gaskin.