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Five Tips for Keeping a Good Credit Score


As small business owners, your personal and business credit scores are essential to ensuring you will have the ability to acquire a loan for potential growth opportunities, or at a time when you experience cash flow issues. The following list covers quick and easy ways to help your credit score good and healthy, in preparation for a time when you might need a small business loan:

1. Pay your bills on time

Foundational to good credit, the best way to maintain or improve your credit score is to pay your bills on time, and whenever possible, pay in full. There are many tools and applications available to small business owners to help you keep track of when your bills are due. Even a simple calendar will do!

If you miss a payment, it’s not the end of the world, but it’s important to know the longer you wait to pay outstanding bill, your credit score will be affected.

2. Keep credit applications to a minimum

Credit cards nowadays offer low credit rates, high cash rebates, and travel rewards to encourage individuals to apply. However, it is important to keep credit applications to a minimum and only apply to those that are necessary.

Whenever you apply for a new credit card, credit agencies are used to track and check your credit score. Several things these credit agencies look at include the frequency you apply for credits, the total times your credit score was looked at, and credit availability per credit card.

Submitting too many credit applications can be deemed a red flag to credit agencies. To avoid being labeled as a “credit hunter”, we suggest you to keep credit applications to a minimum to avoid hurting your ability to secure new credits in the future.

3. Think before you cancel credit cards

For some individuals, cancelling credit cards may be the first step to take in avoiding excessive spending and the start of being in control of personal finance. While it may make sense to cancel unnecessary credit cards, there are many factors you should consider before deciding whether or not you should cancel your credit card for good.

Consider the age of your credit card – old credit is best credit. Did you know that the duration of how long the account has been open is a factor in determining your credit score? According to, 15% of your credit score is determined by how long you’ve been borrowing.

Closing your credit account does not mean your credit goes off your record. In fact, it stays on a permanent credit report for a minimum of seven years. But keeping an old credit card in good standing could be a great credit-building tool down the road, so think before you cut!

4. Avoid “maxing out” your credit cards

Maxing out your credit cards can happen, especially during the holiday season when business owners are often juggling higher personal and business debt. In order to bounce back from excessive spending and maxed out cards, there are a few steps you can take.

Prioritization in debt repayments is key – step one is always determining which debts to pay off first. While you want to pay it all off, if you can’t, it is recommended to pay off the highest interest loan or any loan you have put up as personal collateral. While tackling your high interest loans, it is important to ensure you still make minimum required payments to all debts.

Cutting unnecessary costs, even small cuts from your daily operating expenses in different areas can go a long way. Revisit your budget quarterly and see if there’s anyway you can cut down spending and put the savings toward debt payments.

5. If you can’t pay your bills or meet financial repayments, seek other options

As mentioned earlier, the best and easiest way to maintain and improve your credit score is to pay your bills on time. However, we understand due to financial constraints, this may not always be an option. If you know you will be experiencing difficulty with cash flow, it’s best to act as quickly as possible.

Contact your credit providers and find out if there are procedures and special payment options available based on your needs. While this may still result is a drop in your credit score, contacting them beforehand may help you avoid overdue debt listed on your permanent credit report.

We encourage you to speak to professionals for financial and legal services, private or free offered by community organizations and government agencies. You may be offered a debt consolidation loan or advice that may be of help.

Lastly, cash flow forecasting and management apps may help get in front of cash flow crunches that can lead to the behaviours that hurt your credit score. Use tools like Lendified’s Mentio app to stay ahead and see the bigger picture.

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About the Author



Lendified is Canada's premier online lender for small businesses. The company was founded by former bank executives dedicated to provide businesses with fast, easy, and affordable financing. The Lendified team regularly produces blogs and guides to help small business owners succeed.

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