In a sluggish economy, business owners must maintain a good credit score (above 680) in order to keep their financing options open.

Paying bills on time (especially mortgages) is only part of the solution. Small business owners should keep debt-to-income (DTI) ratios below 50 percent. Because credit bureaus do not track personal income, they monitor the DTI by looking at outstanding credit card bills and other revolving and installment payments such as mortgages and student loans. When credit card payables exceed 50 percent of the total credit card limit, the FICO model puts an individual in a riskier category compared to someone with a DTI less than 50 example.

For example, a person with two credit cards, both with a limit of $20,000 and a balance of $5,000, will have a higher credit score than someone with one card with a limit of $20,000 and a balance of $10,000. Therefore, small business owners who need to borrow more than 50 percent of their credit card limit should apply for another card.

It’s important to note that, business credit cards do not affect the DTI. For more information on building credit check out our recent blog posts:

• Catch Mistakes on Your Credit Report
• How Is My FICO Score Determined?
• What Happens to Your Credit Score when Someone Views Your Report