How to Build a Good Credit Reputation: A Guide for Small Business Owners

June 11, 2024
Reading Time
4 minute read

If you’ve ever had to loan a large sum of money for a house or a car, you know how important it is to have a good credit standing. The same goes for business loans if you’re taking out credit as a business owner. A good credit reputation is essential for long-term success. After all, it opens doors to a variety of opportunities, from securing funding for expansion to being able to negotiate more favorable terms with suppliers and vendors. Without a solid credit history, businesses may find themselves facing barriers to growth and limited access to critical financing options.

Moreover, a positive credit history for businesses has significant effects beyond just financial transactions. It serves as a testament to the reliability and trustworthiness of the business, instilling confidence in future lenders, investors, suppliers, and customers alike. 

For small business owners looking to establish and enhance their credit standing, here are some essential strategies to consider:

Open a Separate Business Bank Account

Consider maintaining a separate bank account for your business to streamline your financial management and safeguard your personal assets in case your business encounters financial troubles. With separate personal and business bank accounts, entrepreneurs can establish a clear financial trail, which facilitates accurate accounting and tax compliance while minimizing the risk of legal entanglements.

Consider opening a digital business bank account. Compared to traditional business banking accounts that require maintaining balances or provide very little interest rate, our Maya Business Deposit requires zero maintaining balance and provides depositors with a generous 2.5 percent annual interest rate. You can designate this account as your settlement account for sales made through different channels. 

What’s more, you can gain access to Maya Flexi Loan, a business loan Philippines’ businesses can use to fund their expansion and growth. This business banking loan is a flexible credit line that can unlock up to PHP 2 million in additional funding. Aside from providing you with much-needed capital for your small business, this business loan can help improve your business’s credit score by adding diversity to your credit portfolio.

Always Pay Your Bills on Time

Timely bills payment is essential in ensuring a positive credit history. Whether it's rent for office space, utilities, or invoices from suppliers, paying bills promptly demonstrates reliability and financial responsibility. What’s more, it’s not just your business’s bills that may be considered. When you apply for business banking loans, even your personal finances may be examined since you are the owner of the business.

While forgetting to pay your bills may seem trivial, it can have major implications when it comes to your personal and business credit history. To avoid this issue altogether, set reminders on your phone or computer to pay your bills when you need to. Better yet, open a Maya Disbursement account where you can schedule recurring payments like payroll and supplier payments to avoid penalties and maintain your solid credit reputation

Use Your Business Credit Card Responsibly

A business credit card can be a valuable tool for managing day-to-day expenses and building credit history. However, it's essential to use this financial resource responsibly. 

Resist the temptation to overspend or use the card for personal purchases as this can lead to financial strain and can negatively impact your business's creditworthiness. Instead, use the credit card for legitimate business expenses only, such as inventory purchases or marketing campaigns. More importantly, strive to pay off the balance in full each month to avoid accruing interest charges.

Increase Your Credit Limit

Increasing the credit limit on your business credit card can have several advantages when managed judiciously. For one, a higher credit limit can improve your credit utilization ratio, a concept we’ll cover next. 

Additionally, it can provide greater flexibility in managing cash flow and accommodating larger expenses. To request a credit limit increase with your financial institution, demonstrate responsible card usage by consistently paying bills on time. Then, you can call your bank to request for a credit limit increase. If you’re in good standing with your bank or credit card company, they will usually be happy to oblige.

Pay Attention to Your Credit Utilization Ratio

The credit utilization ratio, which measures the amount of available credit you're using relative to your total credit limit, is a significant factor in determining your credit score.

By keeping this ratio low—typically below 30%—you can signal to creditors that you're managing credit responsibly and not overly reliant on borrowed funds. To illustrate, if you have a PHP 100,000 credit limit, try to keep your monthly charges below PHP 30,000 per month

Furthermore, regularly review your credit card balances and credit limits to ensure that your credit utilization ratio remains within a healthy range. If necessary, consider spreading out expenses or requesting credit limit increases to maintain optimal utilization.

Check and Manage Your Credit Report

Regularly monitor your business credit report to detect errors or inaccuracies that could negatively impact your credit standing. You can request copies of your credit report from major credit bureaus or Special Accessing Entities (SAEs).

In the Philippines, there are only 4 accredited credit bureaus. These are CIBI Information, Inc., Compuscan Philippines Inc., CRIF Philippines, and TransUnion Information Solutions Philippines. To request for a credit report, you can simply visit their website and follow the instructions.

If you identify errors, take prompt action to dispute them with the respective credit bureau and provide supporting documentation as needed.

Build a Strong Credit Standing with the Help of Maya Business

Sign up for Maya Business to help your business establish a good credit history and to maximize its true potential.

By signing up for a Maya Business account, you can set up a Maya Business Deposit account and use it as your settlement account. With an industry-leading 2.5% per annum interest rate, you’ll earn PHP 25,000 in interest per year on a PHP 1 million deposit. What’s more, you can send money to your partners and suppliers for free via InstaPay and PESONet, resulting in savings over time.

In addition, signing up qualifies you for a no-collateral Maya Flexi Loan offer of up to PHP 2 million in just 3 months. This provides critical funding so you can grab opportunities and realize your dream of business expansion. Just use Maya Business as your primary processor for all wallet and card payments. The more you use our solutions, the better the loan offer will be. 

Grab this opportunity to sign up for Maya Business and experience the full benefits of Maya Business solutions.