Business credit building doesn’t have to be so hard

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Business credit building doesn’t have to be so hard

Published By Janet Gershen-Siegel at November 13, 2017

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Business credit building means that your firm obtains opportunities you never felt that you would. You can get all-new equipment, bid on realty, and deal with the company payroll, even when times are a bit lean. This is specifically helpful in holiday business enterprises, where you can go for months with just minimal sales.

Due to this, you really should focus 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 opportunities, or they will set you back you a lot more. And no company owner wants that. You need to know what affects your company credit before you can make it better.

Credit History Length Matters

This is in essence how long your company has been working with company credit. Naturally newer businesses will have brief credit histories. Although there is not a lot you can specifically do about that, do not worry. Credit reporting bureaus will also take a look at your personal credit score and your record 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 very first credit card not too long ago), then your individual credit can come to the rescue of your company.

Of course the reverse is also true – if your consumer credit history is poor, then it will affect your company credit scores until your small business and personal credit can be separated.

Do Not Permit Your Credit Utilization Rate to Harm Your Small business

Your credit utilization rate just means the amount of cash you have on credit which is then divided by your total available credit. Lenders usually do not want to see this exceed 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 work off your financial obligations before borrowing more.

Your Payment History is Important

Late payments will have an effect on your business credit score for a good seven years. If you pay your business (and personal) debts off, as rapidly as possible and as fully as possible, then you can make a very real difference when it involves your credit scores. Be sure to pay without delay and you will enjoy the benefits of promptness.

Your Personal Credit can Impact Your Corporate Credit

Are you having an unsatisfactory business year? Then it could end up on your individual credit score. And in case your firm has not been in existence for too long, it will directly impact your business credit. However, you can unlink the two if you take measures to separate them. Say, if you get credit cards only for your company, or you open up business checking accounts and other bank accounts (or even get a business loan), then the credit reporting agencies will start to treat your personal and corporate credit separately. Also, ensure to incorporate, or at least file a DBA (doing business as) status. You can also take care of your company’s statements with your business credit card or checking account, and insure it is the small business’s full name on the bill and not yours.

The Credit Reporting Bureaus Can Just Plain Get it Wrong

Just the same as each company out there, credit reporting agencies like Equifax and Experian are only as good as their records. If your firm’s name is like another’s, or your name is a lot like another small business owner’s, there can possibly be some oversights. So keep track of those reports, and your small business report at Dun & Bradstreet, PAYDEX. Stay on top of these reports and challenge charges with documentation and transparent 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 exclusively handles individual and not corporate credit, TransUnion. If you do not know how you can pull a credit report, do not worry. It’s simple.

Once you find out what affects your business credit score, you are that much nearer to developing enhanced corporate credit.

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