How to Improve Business Credit Score to Get Loans in Canada

Running a business in Canada often means you’ll need access to financing. Whether it’s for buying equipment, hiring staff, or growing your operations, having a good business credit score can make it easier to get a business loan in Canada. 

Let’s take a closer look at how your credit score works and what steps you can take to improve your credit score in Canada.

What Is a Credit Score?

A credit score is a number that shows how reliable you are at paying back borrowed money. Lenders use it to decide whether or not to give you a loan. There are two main types of credit scores: personal and business.

Your personal credit score is usually a number between 300 and 900. It shows how well you manage your own debts. A higher score means you’re more likely to pay back money on time.

A business credit score, on the other hand, applies to your company. It’s a number from 300 to 1400. Lenders use it to guess if your business will pay its bills or default in the next 1–2 years. A high score tells lenders that your business is stable and less likely to miss payments.

Both personal and business credit scores are important. This is especially true when applying for a business loan in Canada.

Why Business Credit Scores Matter

Your business credit Canada profile helps lenders decide if they should lend you money. A good credit score can open doors to better financing. It can help you qualify for larger loans or lower interest rates.

If you’re applying for a Canada business loan, the lender may also look at your personal credit. This happens often when your business is small or just starting out.

Credit scores don’t only affect loans. They can also come up when you try to lease equipment or vehicles. Even landlords and employers may check your credit when reviewing applications. So, building a good small business credit history is useful in many ways.

Now let’s look at how to build business credit and keep your score strong.

How to Improve Business Credit Score to Get Loans in Canada

Here’s how you can improve your credit score in Canada:

Make On-Time Payments to Build Strong Business Credit

The most important part of your credit score is your payment history. This means how often you pay your bills on time.

To protect your score:

• Always pay bills before the due date
• Make at least the minimum payment if you can’t pay in full
• Don’t skip payments, even during disputes
• Let your lender know early if you’re having trouble

Some banks send alerts when your credit usage gets too high. These reminders can help you stay on track. Good payment habits are the first step to improve credit score in Canada.

Maintain Credit Utilization Below 30% to Protect Your Score

Try not to borrow more than you need. Keep your credit usage below 30% of your available credit. For example, if you have a credit card limit of $5,000, try not to use more than $1,500 at a time.

Using too much of your credit makes lenders nervous. It can hurt your credit score for loan approval, even if you always pay it back. Keep balances low and pay on time.

This will help you build business credit while showing lenders you can manage debt responsibly.

Why Older Credit Accounts Keep Your Business Credit File Healthy

The longer you’ve had a credit account, the better it looks. If you close old accounts, your score might drop. So, even if you don’t use an older account often, it may be smart to keep it open, just make sure there’s no fee.

Also, be careful when transferring balances to new cards. New accounts lower the average age of your credit history. Keeping older accounts active gives you more stability in your credit file.

This small habit can support your efforts to improve your business credit score Canada over time.

Don’t Apply for Too Many Loans at Once

Every time you apply for credit, it creates a record called a “hard inquiry.” Too many hard inquiries in a short time can bring your score down.

To avoid this:

• Only apply when you really need credit
• Don’t apply to many places at once
• When comparing lenders, do it within a short period (like two weeks)

Some credit checks, like checking your own score, are called “soft hits.” These don’t hurt your score. But “hard hits” from applications can lower it. Be careful not to overdo it.

This is even more important if you’ve had credit issues before. You don’t want to appear as if you’re chasing credit. That can affect your ability to qualify for a business loan.

Diversify Credit Types (Loans, Cards, Lines) to Strengthen Your Score”

Lenders like to see that you can handle different types of credit. This could be:

• A credit card
• A car or equipment loan
• A line of credit

Using more than one type of credit responsibly helps show that you’re a stable borrower. It also improves your credit file overall. Just be sure you don’t borrow more than you can repay.

Diversifying your credit can also help if you’ve had trouble with a bad credit business loan in the past.

Canada Small Business Financing Program (CSBFP): Credit & Loan Support

If you’re a small business looking for a loan, the Canada Small Business Financing Program (CSBFP) can help. This program helps businesses get loans by sharing the risk with banks and credit unions.

Over the last decade, this program has helped over 53,000 small businesses get more than $11 billion in loans.

Who Can Apply?

To be eligible:

• Your business must be based in Canada
• It must make less than $10 million in revenue per year
• Farming businesses are not eligible (but there are other programs for them)

This program is a good option if you’re working to get a business loan in Canada with limited credit history.

How Much Can You Get?

Under the CSBFP:

• You can borrow up to $1.15 million
• Up to $1 million can go toward things like equipment or property
• Up to $150,000 can be used for working capital or intangible assets
• A separate $150,000 is available through a line of credit

What Can the Loan Be Used For?

The funds can be used for:

• Buying or improving property
• Buying new or used equipment
• Renovating leased spaces
• Franchise costs or software
• Day-to-day business expenses

How to Apply

To apply, visit any bank or credit union in Canada. Talk to a financial officer about your business and your needs. If they approve the loan, they’ll register it through the government.

This program is one of the best ways for small businesses to access funding, especially if you’re trying to build credit or have faced issues with a bad credit business loan before.

Final Thoughts

A strong business credit score is key to unlocking better financing. Whether you’re looking for a small business credit option or a full Canada business loan, your score plays a big role.

Start by making your payments on time. Use credit wisely and keep old accounts open. Avoid too many credit applications and try to keep a good mix of credit types.

And if you’re just getting started, government programs like CSBFP can give you a head start.

With the right habits, it’s possible to improve your credit score in Canada, grow your business, and access the funds you need to succeed.

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Disclaimer: The information provided in this blog is for general informational purposes only. For professional assistance and advice, please contact experts.