Having trouble getting a loan for your small business?

There are many reasons you might have issues obtaining a loan, but do you know your credit score?

A bad credit score can impact many parts of your life, but it can also impair your ability to get a loan. According to SBA, 45% of small business owners did not know that their business has an Employer Identification Number (EIN) that indicates business credit score.

Unfortunately, traditional lending institutions rely on credit score when assessing if they will loan to you — however, there are ways you can increase your credit score. Below are just a few examples of how to improve your credit and also clear up a few misconceptions about your credit.

Limit Your Credit Usage

Do you already owe money to a bank?

This is one factor that impacts your credit. The debt-to-equity ratio is one common metric which is a measure of your company’s “financial leverage in relation to the amount it is currently using”.

Another term to know is credit utilization ratio, which is a measure of how much credit is available to your business in relation to how much your credit your business is using. An unevenly high ratio of this metric means a low credit score. Ideally, your credit utilization ratio should be below 30%.

A few pre-emptive steps can be taken to help improve your score in these areas. One way is to make small payments over the course of the month as opposed to waiting until the end of the month to make your payment — also, you should not put too much credit burden on one card.

Pay Bills on Time

1 in 3 Americans are late on paying their credit card bills, and this can have an effect on your credit score.

It is best to simply pay off your credit all at once on your card, though some people may believe that this lowers credit score — you may see your credit score lower initially, but experts indicate that this is a better tactic in the long-run.

Can’t pay off your balances? Another option you have is to increase your credit score. No, this won’t negatively affect your credit and could, in fact, improve your score! Be wary of adding more expenses though, because then the effect is null.

Avoid Closing Accounts

OK maybe you are a bit overwhelmed and so you, logically, think that if you shut down your credit account, then you won’t overspend again. Though this may be true, you can also hurt your credit score by closing too many credit accounts at once

Check out this article from The Balance to see advice on when you should and should not close your credit account. If you really must close a credit card, choose a line with a “positive payment history as these will linger on your credit history for 10 years from the closure date.”

Check Your Score Regularly

In a SmallBizTrends survey, 72% of small business owners don’t know their credit score and 60% don’t know where to look.

Good news! There are many sites that let you check your credit scores for free: you just have to make sure they are legitimate. From Annual Credit Report, you can review credit reports from the three credit bureaus Experian, TransUnion, and Equifax. You can either get all of your reports at once every 12 months, or you can request to receive them from each in 4-month intervals.

By reviewing your credit score, you can keep track of any errors or inconsistencies that may pop-up and address them if there are any issues.


Now that you have some of these tips, you are better equipped to protect your credit score, which, in turn, protects your business — which can leave room for growth in the future.

Need software solutions to keep track of your expenses more easily? CUE can help! Check out our marketplace and find the best software solutions to fit your small business needs. QuickBooks provided an informative article on increasing credit score, which we at CUE drew from to give you this article.