Build your business credit

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Build your business credit

Published By Janet Gershen-Siegel at December 4, 2017


Building business credit means that your firm attains opportunities you never assumed 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 businesses, where you can go for several months with simply nominal sales.

As a result of this, you should really tackle building 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 have to know what affects your company credit before you can make it better.

Credit History Length Matters

This is essentially the length of time your small business has been using business credit. Naturally newer small businesses will have short credit histories. While there is not so much you can specifically do about that, do not fret. Credit reporting bureaus will also assess your personal credit score and your very own background of payments. If your personal credit is excellent, and especially if you have a somewhat extensive credit history (that is, you did not just get your first credit card fairly recently), then your personal credit can come to the rescue of your company.

Naturally the opposite is also true– if your individual credit history is bad, then it will affect your business credit scores until your business and consumer credit can be separated.

Your Payment History is Important

Late repayments will impact your company credit score for a good seven years. If you pay your company (and personal) financial obligations off, as quickly as possible and as fully as possible, then you can make a very real difference when it pertains to your credit scores. Make sure to pay timely and you will experience the rewards of punctuality.

Your Personal Credit can Affect Your Corporate Credit

Are you having a dissatisfactory business year? Then it could wind up on your personal credit score. And in case your firm has not been around for too long, it will directly impact your business credit. Having said that, you can separate them both by taking measures to unlink them. Say, if you get credit cards solely for your company, or you open up business checking accounts and various other bank accounts (or maybe get a business loan), then the credit reporting bureaus will start to address your consumer and corporate credit separately. Also, ensure to incorporate, or at the very least file a DBA (doing business as) status. You can also pay for your company’s debts with your small business credit card or checking account, and make certain it is the small business’s name on the bill and not your own.

Do not Let Your Credit Utilization Rate Hurt Your Company

Your credit utilization rate just means the amount of cash you have on credit which is then divided by your total available credit. Lenders generally speaking do not wish to see this exceed 30% (so for each $100 in credit, do not borrow on more than $30 of that). If this percentage is climbing, you’ll need to spend down and repay your debts ahead of borrowing more.

The Credit Reporting Bureaus Can Just Plain Get it Wrong

Just Like as each company around, credit reporting bureaus such as Equifax and Experian are only as good as their records. If your business’s name resembles another’s, or your name is a lot like another company owner’s, there can possibly 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 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 monitoring the credit reporting agency which just handles personal and not corporate credit, TransUnion. If you do not know exactly how to pull a credit report, do not worry. It’s simple.

Once you find out what impacts your business credit score, you are that much nearer to creating better corporate credit.

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