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Build corporate credit

Published By Janet Gershen-Siegel at December 15th, 2017

Building corporate credit means that your company obtains opportunities you never considered 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 particularly helpful in holiday firms, where you can go for months with only nominal sales.

Given this, you really should work on growing your business 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 business owner wants that. You need to understand what affects your company credit before you can make it better.

Credit History Length Matters

This is in essence how long your small business has been working with business credit. Needless to say newer companies will have very short credit histories. While there is not too much you can specifically do about that, do not panic. Credit reporting bureaus will also look into your personal credit score and your personal record of payments. If your own personal credit is good, and in particular if you have a fairly lengthy credit history (that is, you did not just get your very first credit card a short while ago), then your consumer credit can come to the rescue of your business.

Typically the opposite is also right– if your individual credit history is bad, then it will have a bearing on your corporate credit scores until your company and consumer credit can be split.

Your Payment History is Important

Late repayments will influence your business credit score for a good seven years. If you pay your small business (and personal) financial obligations off, as speedily as possible and as fully as possible, then you can make a very real difference when it comes to your credit scores. Ensure to pay in a timely manner and you will experience the benefits of punctuality.

Your Personal Credit can Have an effect on Your Corporate Credit

Are you having a dissatisfactory business year? Then it could end up on your personal credit score. And in the event that your small business has not been in existence for too long, it will directly affect your company credit. Nevertheless, you can unlink both by taking steps to uncouple them. Say, if you get credit cards exclusively for your small business, or you open business checking accounts and various other bank accounts (or perhaps get a business loan), then the credit reporting agencies will begin to treat your private and corporate credit independently. Also, ensure to incorporate, or at the very least file a DBA (doing business as) status. You can also pay for your company’s statements with your company credit card or checking account, and insure it is the company’s name on the bill and not your own.

Do not Let Your Credit Utilization Rate Damage Your Small business

Credit utilization rate just means the amount of cash you have on credit which is then divided by your overall available credit. Lenders commonly do not want to see this go above 30% (so for every $100 in credit, do not borrow on more than $30 of that). If this percentage is climbing, you’ll have to spend down and work off your financial debts prior to borrowing more.

The Credit Reporting Bureaus Can and Do Sometimes Get it Wrong

Just the same as each entity out there, credit reporting bureaus just like Equifax and Experian are only as good as their files. If your firm’s name resembles another’s, or your name is a lot like another small business owner’s, there can possibly be some oversights. So monitor those reports, and your small business report at Dun & Bradstreet, PAYDEX. Stay on top of these reports and question charges with documentation and crystal clear communications. Do not just allow them to stay incorrect! You can correct this! And while you’re at, it you should also be overseeing the credit reporting agency which only handles consumer and not company credit, TransUnion. If you do not know how you can pull a credit report, do not worry. It is simple– just use the above links.

Once you understand what affects your small business credit score, you are that much closer to building improved corporate credit.

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