Published By Janet Gershen-Siegel at December 30, 2017
Increasing your business credit scores means that your small business acquires chances you never felt you would. You can get cutting-edge equipment, bid on real property, and cover the company payroll, even when times are a bit lean. This is particularly helpful in seasonal business enterprises, where you can go for several months with simply nominal sales.
Given this, you should really focus on developing your business credit. Improve and maintain your scores and you will have these possibilities. Do not, and either you do not get these opportunities, or they will cost you a lot more. And no company owner wants that. You should recognize what affects your small business credit before you can make it better.
This is basically how long your firm has been using company credit. Naturally newer companies will have very short credit histories. Though there is not too much you can particularly do about that, do not fret. Credit reporting bureaus will also take a look at your personal credit score and your history of payments. If your own personal credit is good, and especially if you have a reasonably long credit history (that is, you did not just get your very first credit card not too long ago), then your personal credit can come to the rescue of your company.
Naturally the opposite is also right– if your private credit history is poor, then it will impact your company credit scores until your company and consumer credit can be split.
Your credit utilization rate just shows the amount of money you have on credit which is then divided by your overall available credit. Lenders ordinarily do not wish to see this go above 30% (so for each $100 in credit, do not borrow on over $30 of that). If this percentage is rising, you’ll have to spend down and repay your debts ahead of borrowing more.
Overdue monthly payments will affect your small business credit score for a good seven years. If you pay your business (and personal) debts off, as quickly as possible and as fully as possible, then you can make a very real difference when it comes to your credit scores. Be sure to pay punctually and you will enjoy the benefits of punctuality.
A dissatisfactory business year could end up on your personal credit score. And just in case your firm has not been in existence for too long, it will directly influence your company credit. Fortunately, you can separate them both by taking steps to uncouple them. For example, if you get credit cards just for your firm, or you open up business checking accounts and other bank accounts (or perhaps get a business loan), then the credit reporting agencies will begin to address your individual and corporate credit on an individual basis. Also, ensure 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 firm credit card or checking account, and insure it is the business’s full name on the bill and not your own.
Just the same as every entity around, credit reporting bureaus just like Equifax and Experian will be only as good as their information. If your company’s name is similar to another’s, or your name is a lot like another small business owner’s, there can potentially be some oversights. So keep an eye on those reports, and your company report at Dun & Bradstreet, PAYDEX. Stay on top of these reports and dispute 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 checking the credit reporting agency which exclusively handles personal and not corporate credit, TransUnion. If you do not know how you can pull a credit report, do not stress. It’s simple.
Once you know what affects your company credit score, you are that much nearer to building improved corporate credit.