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5 Easy Ways to Manage Your Business Credit Profile

Published By Janet Gershen-Siegel at April 22nd, 2018

Are you in search of 5 easy ways to manage your business credit profile? We’ve got five great ways to do so, and you can get started today. Managing your business credit profile will make it easier for you to get loans and credit, and you will get better terms for both.

It can also mean the difference between wanting company credit and loans, and not getting them at all. So here are five straightforward methods to manage your business credit profile.

1. Do your best to improve your payment history

How do you make your company’s payment history better? It’s simple – just pay your bills promptly, and as close to ‘in full’ as you possibly can. That can be easier said than done. The reality is, in the same way that you need to keep your personal spending within your means, you also must keep your small business spending realistic.

No one can predict the future. All anybody can do is to go by whatever information is available. Additionally it should be analyzed in a way which is not excessively optimistic. For new businesses, that should mean evaluating industry trends. For more businesses that are not so new, it means meticulously scrutinizing your business’s performance. This ought to be under all sorts of circumstances.

Hence if it looks as if your business can potentially make $1 million next quarter, but you need to borrow money now, do not borrow beyond $1 million. And you most likely should borrow even less than that. You need to keep your company spending in check and not wager the company’s future on a hunch. These are both great ways to get your credit balances down. Consequently, that will improve your payment history.

Consider that anything could happen, such as: your biggest supplier could go out of business, or your best worker could quit, or important crops could fail or any of a number of setbacks could happen. Being daring in business can often be a good idea. However, you still need to pay your small business’s bills.

2. Credit History Length Matters

This is basically for how long your company has been taking advantage of business credit. Naturally newer businesses will have short credit histories. While there is not a lot you can specifically do about that and there’s no real hack for that, per se, do not despair. Credit reporting bureaus will also review your consumer credit score and your own history of payments. If your personal credit is good, and particularly if you have a fairly long credit history (that is, you did not just get your first credit card just recently), then your consumer credit can come to the rescue of your business.

Naturally the opposite is also true – if your personal credit history is poor, then it will influence your company credit scores until your small business and consumer credit can be split up.

3. Stay on top of your small business credit profile and its scores

This means on a regular basis getting and reviewing both your small business and consumer credit profiles. This is because, for new companies and sole proprietorships (and in particular if your company is both), credit bureaus will often look at your consumer credit at the same time. That’s why, you will need to stay on top of both sets of scores, because credit scoring reports can have errors and you have the right to dispute them. However, you will not know there are any mistakes unless you check.

Disputing a credit report mistake generally involves sending a paper letter with copies of any proofs of payment with it. These are usually going to be receipts and/or cancelled checks. Never send the originals – always send copies and keep the originals. Precisely detail any charges that you are disputing. Make certain to use certified mail so you will have proof that you sent your dispute.

If there are no inaccuracies on your credit reports, then of course you can not dispute anything. And please don’t try to pull a fast one and dispute your credit score if there is really nothing wrong with it! Credit reporting agencies, understandably so, are not going to like that.

4. The Credit Reporting Bureaus Can Get it Wrong

Just the same as every entity around, credit reporting agencies like Equifax and Experian are only as good as their records. If your company’s title is similar to another’s, or your full name is a lot like another entrepreneur’s, there can potentially be some mistakes. So monitor those reports, and your business report at Dun & Bradstreet, PAYDEX. Stay on top of these reports and dispute charges with paperwork and clear communications. Do not just allow them to stay wrong! You can resolve this! And while you’re at, it you should also be monitoring the credit reporting bureau which only deals with personal and not commercial credit, TransUnion. If you do not know the way to pull a credit report, do not stress. It is simple – just use the above web links.

5. Do not Let Your Credit Utilization Rate Affect Your Small business

Credit utilization rate simply means the quantity of money you have on credit which is then divided by your total available credit. Lenders commonly do not want to see this go above 30% (so for every $100 in credit, do not borrow on greater than $30 of that). If this percent is rising, you’ll need to spend down and satisfy your financial obligations before borrowing more.

Takeaways

Once you know how to manage your business credit profile, then you are that much nearer to establishing improved business credit. Learn more here and get started toward building business credit attached to your company’s EIN and not your SSN.

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