Published By Janet Gershen-Siegel at December 22, 2017
Building corporate credit means that your company gets opportunities you never knew you would. You can get new equipment, bid on real property, 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 several months with merely nominal sales.
Due to this, you need to work on growing your corporate credit. Improve and maintain your scores and you will have these possibilities. Do not, and either you do not get these chances, or they will cost you a lot more. And no business owner wants that. You need to understand what affects your company credit before you can make it better.
This is basically how long your small business has been working with business credit. Needless to say newer firms will have short credit histories. Though there is not so much you can specifically do about that, do not panic. Credit reporting agencies will also review your personal credit score and your personal record of payments. If your individual credit is good, and especially if you have a somewhat lengthy credit history (that is, you did not just get your very first credit card recently), then your individual credit can come to the rescue of your business.
Obviously the reverse is also true– if your consumer credit history is bad, then it will have a bearing on your corporate credit scores until your company and consumer credit can be split up.
Your credit utilization rate just shows 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 exceed 30% (so for each $100 in credit, do not borrow on more than $30 of that). If this percent is climbing, you’ll need to spend down and work off your debts ahead of borrowing more.
Overdue payments will impact 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 fully as possible, then you can make a very real difference when it concerns your credit scores. See to it to pay punctually and you will experience the rewards of punctuality.
Are you having a bad business year? Then it could end up on your individual credit score. And in the event that your business has not been in existence for too long, it will directly affect your corporate credit. That being said, you can unlink them both by taking measures to split up them. As an example, if you get credit cards only 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 consumer and small business credit separately. Also, make sure to incorporate, or at least file a DBA (doing business as) status. You can also take care of your company’s monthly bills with your small business credit card or checking account, and make certain it is the small business’s name on the bill and not yours.
Just the same as every company out there, credit reporting bureaus like Equifax and Experian are only as good as their records. If your company’s name is similar to another’s, or your name is a lot like another small business owner’s, there can possibly be some mistakes. So keep track of those reports, and your business report at Dun & Bradstreet, PAYDEX. Stay on top of these reports and question charges with documentation and transparent communications. Do not just allow them to stay wrong! You can fix this! And while you’re at, it you should also be checking the credit reporting agency which solely handles individual and not company credit, TransUnion. If you do not know how you can pull a credit report, do not worry. It’s simple.
Once you recognize what affects your corporate credit score, you are that much nearer to creating improved corporate credit.