Key factors That Impact Your Credit Score and What You Can Do to Improve it.


Both your personal and business credit scores matter when you apply for a  business loan. Institutions will check your credit scores and decide whether or not you are creditworthy enough to repay the loan on time.

While there are many different business credit scoring models used by institutions, there are 3 factors that affect your credit score the most. Let’s take a closer look at each factor.


Payment history

One of the most important credit-scoring factors is on-time payments on your credit history. This is key to maintaining a high credit score. Missed payments will lower your credit score significantly, as will late payments, based on the number of days late. For example, being 30 days has a lower impact than a 60 or 90-day late payment.

So, what can you do? You need to ensure you are making on-time payments of at least the minimum amount due. This will make a huge difference in your business credit scores.


Credit utilization

The second most important factor that affects your credit score is credit utilization. Credit utilization is the percentage of your available credit that you are using. For example, if your credit limit is $2,500 and you have used $800 of it, your credit utilization, in this case, is 32%. Here is an easy formula to follow:

Total Balance ÷ Total Credit Limit = Credit Utilization x 100 = %

$800 ÷ $2,500 = 0.32 x 100 = 32%

In Canada, you should aim to keep the Credit Utilization number under 35 percent. If the number is more than that, it can potentially hurt your credit scores and ability to access financing. A low credit utilization shows that you are a responsible spender and can manage your debt accordingly.


Length of credit history

It is a good idea to keep your old credit accounts open and use them occasionally. The longer you have had your credit account(s) open, the more it will help your credit score. At the same time, closing old accounts and opening new ones can shorten the length of your credit history and ultimately damage your credit scores.

It is important to know that closed accounts can stay on your credit reports for 7 to 10 years which can increase the age of your accounts during that period. But when the account drops off your credit reports, it can then hurt your scores.



There are many different business credit scores out there (Equifax, TransUnion), and you may not know which one your lender might use to consider your application. So, it’s a good rule of thumb to fully understand the above factors that can affect your credit score the most and take steps to improve the health of your credit across.

If you are ready to take your business to next level, then find out if you would qualify for Business Loan today!