Remember how important your credit score was the first time you took out a loan on a new car or bought your first home? In the same way, small business owners’ Paydex Score can be a help or a hindrance in applying for a small business loan and getting a low-interest rate on that loan. When the time comes to push your company forward and an infusion of cash flow is what you need, your ability to get that loan or line of credit is largely based on having good business credit. Below you can find 5 tips for improving your business credit profile!

1. Make Payments On Time

Before we get into how to improve your business’s score, let’s answer one crucial question. What’s the difference between personal credit and business credit?

While credit reporting agencies keep track of your personal FICO score, small business owners’ business score is separate. It is calculated as your Paydex Score, a metric tracked by the commercial analytics firm Dun & Bradstreet. Equifax and Experian also track your business’s score using different metrics than the Paydex Score – think of that score as the same as a personal score just for your business.

Okay, now how do you improve your Paydex Score?

We’ve all heard it before, but it’s true: one of the best methods of building business credit is to pay your bills on time. This tip is arguably the most important and carries the most weight with potential creditors when applying for a small business loan.

In fact, the Paydex Score is entirely calculated based on whether or not you pay your bills on time. Unlike your FICO score, it doesn’t matter how old your credit is or how many lines you have open. All that matters is whether you pay your bills on time after they’re due, or before the lender even asks for them. That’s right, paying early helps your score.

Keep reliable records of all your bills and make sure you pay your bills on time and you’ll be on your way to building business credit.

2. Improve Your Personal Credit Score

Before you have established a business credit score, you may be able to get the ball rolling by personally guaranteeing any small business loans. Having a high personal credit rating improves your odds of opening business accounts regardless of your Paydex score and will allow you to prove your creditworthiness over time. It will also help keep that interest rate as low as possible to keep your margins up.

So how can you improve your personal score to start building business credit? Well, just like with getting good business credit, you have to pay your bills on time. After that, the next biggest thing is to keep your credit utilization low. High limits are great but you want to keep your credit utilization to a minimum.

3. Work With Creditors Who Report

Credit reporting is a necessary step to getting good business credit. It doesn’t matter how good you are at paying bills on time if there aren’t any public records of your payments to tell future lenders that you can be trusted with a small business loan. All the hard work you put into building business credit will be useless unless your lending partner issues a business credit report to the major credit agencies and generates public records of your on-time payments.

If you want to improve your Paydex Score, your vendor will have to provide public records of your payments to Dun & Bradstreet – and for an updated business credit report, they’ll have to send word of your small business loan and on-time payments to credit agencies like Equifax and Experian. So always check with potential lenders to make sure that they provide reliable credit reporting.

Keep in mind that some vendors may not report to the main business credit bureaus and your status as a “good borrower” may go unnoticed. Establishing relationships with suppliers who will report to the major credit agencies is essential to building your score. Then just pay on time.

4. Apply For Credit Before You Need It

A helpful alternative to taking out a business loan is to start slowly and build credit before you are actually in need of it. Secured credit cards are a great way to do this, along with opening commercial accounts at retailers like Office Depot or Staples. Any credit, like business credit cards, that you can take out without using is the way to go. And the lower you keep your credit utilization the faster you’ll establish good business credit.

That way, by the time your business is ready for that first small business loan, you’ll have a positive credit history in place. That means you’ll get a better interest rate on that loan, making it easier to pay your bills.

5. Monitor Your Score

You don’t know what you don’t know. Monitoring your business credit report is critical to its health. Make it routine to check in with the credit bureaus every 4-6 weeks to look over your information and verify that it’s up-to-date and accurate. Address any mistakes immediately with your creditors and follow up until it’s resolved.

Your consistent awareness of where your score stands will prevent any incorrect information from causing issues.