How can a small business improve its credit score?

Making timely payments and reducing debt is crucial for improving a small business's credit score. Timely payments show lenders that the business is reliable and financially responsible, which positively influences credit scores over time. Payment history is one of the most significant factors in credit scoring models, so consistently meeting payment deadlines can build trust with creditors.

Reducing debt also plays an important role. A lower debt-to-credit ratio (the amount of credit being used compared to the total credit available) indicates that the business is managing its debts effectively. When a company pays down its existing debt, it not only lowers this ratio but also demonstrates to creditors that it is capable of managing its financial obligations, which can further enhance its creditworthiness.

The other choices do not align with practices that improve credit. For instance, maximizing debt levels can lead to higher risk and potential defaults, negatively impacting the credit score. Simply borrowing new funds without a strategy does not contribute to credit improvement either. Ignoring past payment records fails to acknowledge that previous payment behavior significantly affects a business's credit score. Therefore, making timely payments and reducing debt represents the most effective strategy for enhancing a small business’s credit score.