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Commercial Credit Builder

Published By Janet Gershen-Siegel at February 17th, 2018

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Have you ever wondered if there’s a good commercial credit builder out there, and how it works? Do you know why a corporate credit builder is a good idea?

Establishing business credit means that your business acquires chances you never felt you would. You can get brand-new equipment, bid on real estate, and deal with the company payroll, even when times are a bit lean. This is particularly helpful in seasonal business enterprises, where you can go for calendar months with solely minimal sales.

Because of this, you should really work on growing your corporate credit. Boost and maintain your scores and you will have these possibilities. 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 should know what affects your company credit before you can make it better.

Your Payment History is Important

Tardy monthly payments will influence your company credit score for a good seven years. If you pay your business (and personal) financial obligations off, as rapidly as possible and as fully as possible, then you can make a very real difference when it concerns your credit scores. See to it that to pay on time and you will reap the rewards of promptness.

Credit History Length Matters

This is in essence the length of time your company has been working with business credit. Of course newer businesses will have very short credit histories. Although there is not a lot you can specifically do about that, do not stress. Credit reporting agencies will also scrutinize your personal credit score and your record of payments. If your own personal credit is good, and particularly if you have a fairly lengthy credit history (that is, you did not just get your very first credit card recently), then your personal credit can come to the rescue of your business.

Normally the opposite is also right– if your private credit history is bad, then it will have an effect on your business credit scores until your business and consumer credit can be separated.

Your Personal Credit can Affect Your Corporate Credit

Are you having a bad business year? Then it could wind up on your consumer credit score. And in the event your company has not been around for too long, it will directly affect your company credit. Nonetheless, you can unlink them both by taking measures to separate them. For example, if you get credit cards only for your small business, 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 the very least file a DBA (doing business as) status. You can also pay for your company’s monthly bills with your company credit card or checking account, and make sure it is the small business’s full name on the bill and not your own.

Do not Allow Your Credit Utilization Rate to Damage Your Small business

Credit utilization rate just signifies the amount of cash you have on credit which is then divided by your total available credit. Lenders usually do not wish to see this go above 30% (so for each $100 in credit, do not borrow on in excess of $30 of that). If this percentage is rising, you’ll need to spend down and pay off your financial obligations ahead of borrowing more.

The Credit Reporting Bureaus Can Get it Wrong

Just the same as every single organization around, credit reporting agencies such as Equifax and Experian are only as good as their data. If your business’s name resembles another’s, or your name is a lot like another company 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 clear-cut communications. Do not just let them stay wrong! 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 business credit, TransUnion. If you do not know how you can pull a credit report, do not worry. It is easy– just use the above links.

Once you know what has an effect on your company credit score, you are that much closer to creating improved corporate credit.

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