Published By Janet Gershen-Siegel at May 3, 2018
Do you know how to hack your business credit score? Read on as we show you five credit score hacks for every business owner.
Establishing business credit means that your firm acquires chances you never believed you would. You can get all-new equipment, bid on buildings, and cover the company payroll, even when times are a bit lean. This is especially helpful in holiday firms, where you can go for months with simply negligible sales.
Because of this, you need to focus on building your company credit. Improve and maintain your scores and you will have these chances. Do not, and either you do not get these business opportunities, or they will set you back you a lot more. And no entrepreneur wants that. You need to understand what affects your company credit before you can make it better.
This is in essence the length of time your firm has been using business credit. Of course newer businesses will have brief credit histories. While there is not a lot you can specifically do about that, do not fret. Credit reporting bureaus will also take a look at your personal credit score and your own history of payments. If your own personal credit is excellent, and especially if you have a fairly lengthy credit history (that is, you did not just get your first credit card recently), then your individual credit can come to the rescue of your business.
Naturally the opposite is also right– if your personal credit history is poor, then it will impact your corporate credit scores until your company and consumer credit can be split.
Late payments will impact your small business credit score for a good seven years. If you pay your business (and personal) debts off, as fast as possible and as fully as possible, then you can make a very real difference when it concerns your credit scores. Make certain to pay without delay and you will enjoy the rewards of punctuality.
Are you having a bad business year? Then it could end up on your consumer credit score. And in case your small business has not been in existence for too long, it will directly impact your corporate credit. Nonetheless, you can unlink the two by taking measures to split up them. As an example, if you get credit cards exclusively for your firm, or you open business checking accounts and various other bank accounts, then the credit reporting agencies will start to treat your personal and small business credit separately. Also, make sure to incorporate, or at least file a DBA. You can also take care of your company’s invoices with your company credit card or checking account, and make certain it is the company’s full name on the bill and not your own.
Credit utilization rate is the amount on credit, then divided by total available credit. Lenders commonly do not wish to see this exceed 30%. So for every $100 in credit, do not borrow on more than $30 of that. If this percent is rising, you’ll need to spend down and work off your financial obligations ahead of borrowing more.
Just like each and every organization out there, credit reporting agencies like Equifax and Experian are only as good as their files. If your business’s name is like another’s, or your name is a lot like another business owner’s, there could be some mistakes. So keep an eye on those reports, and your small business report at Dun & Bradstreet, PAYDEX. Stay on top of these reports and dispute charges with documentation and clear communications.
Do not just allow them to stay wrong! You can correct this! And while you’re at, monitor the credit reporting bureau which exclusively handles personal and not business credit, TransUnion. If you do not know exactly how to pull a credit report, do not worry. It is easy – just Google to find the links to the CRAs.
Once you know what impacts your small business credit score, you are that much nearer to building improved corporate credit. Learn more here and get started toward building business credit attached to your company’s EIN and not your SSN.