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Corporate Credit Building

Published By Janet Gershen-Siegel at February 5th, 2018

Corporate credit building can help your business achieve its greatest potential. We have the lowdown on just what goes into the process.

Developing small business credit means that your company obtains chances you never believed you would. You can get new equipment, bid on real estate, and deal with the company payroll, even when times are a bit lean. This is especially helpful in seasonal firms, where you can go for months with merely low sales.

Because of this, you should really 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 opportunities, or they will cost you a lot more. And no business owner wants that. You must understand what affects your small business credit before you can make it better.

Credit History Length Matters

This is in a nutshell the length of time your small business has been using business credit. Of course newer firms will have brief credit histories. While there is not a lot you can particularly do about that, do not panic. Credit reporting agencies will also take a look at your personal credit score and your personal record of payments. If your consumer credit is good, and especially if you have a reasonably extensive credit history (that is, you did not just get your first credit card not too long ago), then your consumer credit can come to the rescue of your company.

Naturally the converse is also true– if your private credit history is bad, then it will have a bearing on your business credit scores until your small business and consumer credit can be separated.

Your Payment History is Important

Tardy monthly payments will affect your small business 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 pertains to your credit scores. Ensure that to pay in a timely manner and you will enjoy the benefits of promptness.

Your Personal Credit can Have a bearing on Your Corporate Credit

Are you having a bad business year? Then it could end up on your consumer credit score. And in case your small business has not been in existence for too long, it will directly impact your company credit. That being said, you can unlink the two by taking measures to split up them. For instance, if you get credit cards just for your business, or you open up business checking accounts and other bank accounts (or even get a business loan), then the credit reporting bureaus will start to treat your consumer and corporate credit on an individual basis. Also, make certain to incorporate, or at least file a DBA (doing business as) status. You can also pay for your company’s expenses with your small business credit card or checking account, and insure it is the company’s full name on the bill and not yours.

Do not Permit Your Credit Utilization Rate to Damage Your Company

Credit utilization rate just shows the amount of cash you have on credit which is then divided by your total available credit. Lenders in general do not like to see this exceed 30% (so for every $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 work off your financial obligations prior to borrowing more.

The Credit Reporting Bureaus Can Get it Wrong

Just Like as each and every company around, credit reporting bureaus like Equifax and Experian are only as good as their information. If your business’s name resembles another’s, or your name is a lot like another business owner’s, there can potentially be some oversights. So monitor those reports, and your business report at Dun & Bradstreet, PAYDEX. Remain on top of these reports and question charges with records and clear communications. Do not just let them stay wrong! You can repair this! And while you’re at, it you should also be keeping track of the credit reporting bureau which solely handles personal and not business credit, TransUnion. If you do not know how to pull a credit report, do not worry. It is simple– just use the above links.

Once you recognize what has an effect on your corporate credit score, you are that much closer to developing better corporate credit.

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