Published By Janet Gershen-Siegel at April 21, 2018
Are YOU ready to start building business credit fast? Building business credit means that your small business gets opportunities you never felt you would. It can be the difference between success and failure.
You can get cutting-edge equipment, bid on real property, and deal with the company payroll, even when times are a bit lean. This is specifically helpful in holiday firms, where you can go for several months with simply low sales.
As a result of this, you need to focus on growing your corporate credit. Improve and maintain your scores and you will have these opportunities. Do not, and either you do not get these business opportunities, or they will cost you a lot more. And no company owner wants that. You must know what affects your small business credit before you can make it better.
This is in a nutshell the length of time your company has been utilizing business credit. Needless to say newer small businesses will have short credit histories. Although there is not a lot you can specifically do about that, do not fret. Credit reporting bureaus will also scrutinize your personal credit score and your own history of payments. If your individual credit is excellent, and in particular if you have a somewhat long credit history (that is, you did not just get your very first credit card not too long ago), then your individual credit can come to the rescue of your business.
Typically the converse is also true– if your personal credit history is bad, then it will have a bearing on your company credit scores until your small business and consumer credit can be split.
Your credit utilization rate just signifies the amount of money you have on credit which is then divided by your overall available credit. Lenders generally speaking do not like to see this go above 30% (so for each $100 in credit, do not borrow on in excess of $30 of that). If this percent is climbing, you’ll have to spend down and repay your financial debts ahead of borrowing more.
Overdue monthly payments will impact your company credit score for a good seven years. If you pay your business (and personal) debts off, as quickly as possible and as completely as possible, then you can make a very real difference when it concerns your credit scores. Make certain to pay on schedule and you will reap the rewards of promptness.
Are you having a bad business year? Then it could end up on your consumer credit score. And in the event your business has not been in existence for too long, it will directly impact your corporate credit. Nonetheless, you can unlink them both by taking steps to uncouple them. For instance, if you get credit cards just for your company, or you open business checking accounts and other bank accounts (or perhaps get a business loan), then the credit reporting bureaus will start to address your consumer and small business credit separately. Also, be sure to incorporate, or at the very least file a DBA (doing business as) status. You can also pay for your company’s invoices with your company credit card or checking account, and ensure it is the company’s name on the bill and not yours.
Just Like as every entity out there, credit reporting agencies such as Equifax and Experian are only as good as their information. If your business’s name is like another’s, or your name is a lot like another small business owner’s, there can potentially be some mistakes. So monitor those reports, and your company report at Dun & Bradstreet, PAYDEX. Stay on top of these reports and question charges with records and transparent communications. Do not just allow them to stay incorrect! You can repair this! And while you’re at, it you should also be overseeing the credit reporting agency which just handles individual and not corporate credit, TransUnion. If you do not know exactly how to pull a credit report, do not fret. It’s easy.
Once you find out what influences your company credit score, you are that much closer to building better business credit. Learn more here and get started toward building business credit attached to your company’s EIN and not your SSN.