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Easy business credit building

Published By Janet Gershen-Siegel at December 23rd, 2017

Developing business credit means that your company obtains chances you never felt you would. You can get all 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 businesses, where you can go for months with only low sales.

As a result of this, you really should tackle building your corporate credit. Maintain and enhance your businesscredit scores and you will have these chances. Do not, and either you do not get these chances, or they will cost you a lot more. And no entrepreneur wants that. You will need to know what affects your business credit before you can make it better.

Credit History Length Is Vital

This is generally the length of time your firm has been using business credit. Needless to say newer companies will have brief credit histories. While there is not too much you can particularly do about that, do not despair. Credit reporting bureaus will also look at your personal credit score and your history of payments. If your personal credit is good, and in particular if you have a somewhat long credit history (that is, you did not just get your very first credit card not too long ago), then your consumer credit can come to the rescue of your company.

Typically the opposite is also true– if your individual credit history is bad, then it will impact your company credit scores until your business and personal credit can be split up.

Do not Allow Your Credit Utilization Rate to Damage Your Company

Your credit utilization rate just shows the amount of money you have on credit which is then divided by your total available credit. Lenders usually 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 percent is rising, you’ll need to spend down and pay your financial obligations prior to borrowing more.

Your Payment History Truly Matters

Tardy repayments will affect your business credit score for a good seven years. If you pay your small business (and personal) debts off, as rapidly as possible and as completely as possible, then you can make a very real difference when it involves your credit scores. Make sure to pay on schedule and you will experience the rewards of promptness.

Your Personal Credit can Affect Your Corporate Credit

A bad business year could wind up on your consumer credit score. And in case your small business has not been around for too long, it will directly affect your business credit. That being said, you can separate the two by taking steps to separate them. Say, if you get credit cards exclusively for your company, or you open up business checking accounts and other bank accounts (or perhaps get a business loan), then the credit reporting bureaus will start to address your personal and company credit independently. Also, be sure to incorporate, or at the very least file a DBA (doing business as) status. You can also pay for your company’s invoices with your small business credit card or checking account, and ensure it is the company’s name on the bill and not your own.

The Credit Reporting Bureaus Can Just Plain Get it Wrong

Just Like as every organization around, credit reporting agencies such as Equifax and Experian are only as good as their information. If your company’s name is like another’s, or your name is a lot like another entrepreneur’s, there can potentially be some errors. So check those reports, and your business report at Dun & Bradstreet, PAYDEX. Remain on top of these reports and contest charges with documentation and crystal clear communications. Do not just let them stay incorrect! You can correct this! And while you’re at, it you should also be monitoring the credit reporting agency which solely handles individual and not business credit, TransUnion. If you do not know exactly how to pull a credit report, do not fret. It’s easy.

Once you know what influences your company credit score, you are that much nearer to building better corporate credit.

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