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How to Maximize Credit Score to Unlock the Full Power of Your Business Credit

Faith Stewart
February 12, 2022
how to maximize credit score Credit Suite

Are you using your business credit score to its fullest potential? Are you getting the full amount of funding available to you through the power of your business credit? Here’s how to maximize credit score and unlock the power of your business credit.

Your Business Credit Score Makes All the Difference

While it is possible to fund your business with your personal credit, it doesn’t make much sense. Honestly, not only does that limit the amount of business funding you can get, but it also puts your personal finances in jeopardy.

As a result, you need to know how to maximize credit score.  Then, you can scale more effectively and efficiently, without sacrificing your personal credit.

Establishing and Building Business Credit

Most business owners assume that you build credit for a business the same way you build consumer credit. It seems to make sense, so it’s no wonder this is such a common misconception. With consumer credit, you just get credit accounts.  Once you use them, your payment history is reported to the credit bureaus. That happens regardless of whether it is positive or negative.

Consequently, it builds passively on its own, whether you want it to or not. The same is not true of business credit.

When it comes to business credit, you have to be more intentional. This means creating a Fundable foundation, including applying for a D-U-N-S number and opening a separate business bank account, among other things.

Getting Initial Accounts Reporting

Not all business credit accounts report payment history. This is one of the major differences between business credit and personal credit. Of course, pretty much all consumer credit accounts report payment history. As we already said, you do not have to do anything to make that happen, it just does. In contrast, you may not have a business credit score even if you do all the work.

That’s because the accounts you have may not be reporting your on-time payments.

How to Maximize Credit Score: Working with a Business Credit Specialist

Truly, it’s not easy to find accounts that will approve you before your business credit score is established. Even harder than that is finding accounts that will report your positive payment history to the business credit bureaus.

There are essentially two options. The first is to just apply for credit accounts and hope you get approved. Then, hope they are reporting payments. You can monitor your business credit to see if the accounts report payments. If they do, that’s great. If not, you have to start over.

Complicating matters even further is that you need more than one or two accounts reporting initially to build a score strong enough for approval from other accounts. As you can imagine, this trial and error method can take an extremely long time.

Alternatively, you can enlist the help of a business credit specialist. This is someone who can help you find the right accounts.  Those vendors that will both approve you without a credit check and report on-time payments. .

These are typically net accounts. That means they have to be paid in full completely at the end of the net term, usually 30, 60, or 90 days.

How to Maximize Credit Score with the Business Credit Builder

Initial accounts are great, but you need more than just a few accounts to maximize credit score. Beyond that, you cannot just start applying for any and all accounts at random.  You’ll be denied more often than not.

This puts you in the same predicament described above. You can use trial and error until you get enough accounts reporting.  On the other hand, you can save yourself considerable time and frustration by utilizing the Credit Suite Business Credit Builder. Not only will you get step-by-step instructions for setting up your business to be Fundable, but you’ll know which lenders you qualify for at each step.  Better yet, you’ll have the confidence of knowing you are not wasting time with vendors that do not report.

How to Maximize Credit Score Using Personal Guarantees

If you get a credit account with a personal guarantee, you are responsible for repayment. This could mean a hard pull on your personal credit, which can lower your personal credit score. However, in theory, if your business has an account in its own name and it is set up to be a separate entity from you, the owner, it is responsible for its own debt.

Still, many companies require a personal guarantee from the business owner before extending business credit. This is especially true for small businesses. It only makes sense.  Data from the Bureau of Labor statistics states that 20% of new businesses fail within the first year, 45% within the first 5 years, and 65% in the first 10 years. In fact, only 25% of new businesses make it 15 years or more.

Information in regards to why businesses require personal guarantees.No one likes risk. That’s why businesses require a personal guarantee and why business owners don’t love to give one. Still, if you have true business credit that requires a personal guarantee, the good thing is that the business will have to pay first. You will be personally liable for anything that the business funds/ liquidation cannot cover, but you will not be first in line for all of it.

A Personal Guarantee can Accelerate Your Business Growth

A better option is to realize that if your business is small and  young, you are likely going to need a personal guarantee for much of the funding. Yet, you can work to reduce your liability in a number of ways. The first way to do that is to incorporate your business as a corporation, S-corp, or LLC. Your business attorney or accounting professional can help you with that.

Using personal guarantees when necessary will allow you to increase the number of business credit accounts you have in your portfolio. When your business credit score is maximized, lenders may be willing to reduce reliance on personal guarantees.

How to Maximize Credit Score by Improving Your Reports

This process is ongoing. You need to continually have your finger on the pulse of your business credit reports.  This will help you ensure nothing is holding it back.

Whatever improves one report, is most likely going  to improve your reports at the other two of the big 3 credit bureaus. Paying off accounts always pays dividends, as does avoiding bankruptcies. Of course, you should ALWAYS make payments consistently on-time.

It’s also important to monitor reports to ensure you can catch mistakes and get them corrected. You can do this through each agency directly, but with Credit Suite business credit monitoring you can monitor all three for a fraction of the cost.

Business Credit is Your Superpower

Well, maybe not superpower, but it is powerful. Similar to a muscle, you have to keep working to build it and keep it strong if you want to maximize the potential power it holds. The business credit specialists and products at Credit Suite can help you just that. Call today!

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