Published By Janet Gershen-Siegel at October 28, 2017
Building business credit means that your company gets chances you never felt that you would. You can get new equipment, bid on real property, and cover the company payroll, even when times are a bit lean. This is specifically helpful in seasonal companies, where you can go for months with only minimal sales.
Because of this, you should focus on building your business credit. Increase and sustain your 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 business owner wants that. You need to know what affects your business credit before you can make it better.
Overdue payments will bear upon your business credit score for a good seven years. If you pay your business (and personal) financial obligations off, as fast as feasible and as completely as possible, then you can make a very real difference when it concerns your credit scores. See to it to pay on schedule and you will reap the rewards of promptness.
This is generally how long your company has been using business credit. Naturally newer businesses will have brief credit histories. Even though there is not too much you can particularly do about that, do not fret. Credit reporting bureaus will also evaluate your personal credit score and your own history of payments. If your personal credit is good, and especially if you have a fairly long credit history (that is, you did not just get your very first credit card recently), then your personal credit can come to the rescue of your corporate.
Naturally the inverse is also true – if your personal credit history is bad, then it will have a bearing on your business credit scores until your business and personal credit can be separated.
Are you having a substandard business year? Then it could end up on your personal credit score. And if your company has not been around for too long, it will directly influence your company credit. However, you can work to separate the two scores. Do this by taking conscious steps to uncouple them. As an example, if you get credit cards only 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 personal and corporate credit separately. Also, make certain to incorporate, or at minimum register a DBA (doing business as) status. You can also take care of your company’s bills with your business credit card or checking account, and make certain it is the business’s name on the bill and not your own.
Just the same as each company around, credit reporting agencies like Equifax and Experianare only as good as their records. If your company’s full name resembles another’s, or your full name is a lot like another business owner’s, there can potentially be some mistakes. So monitor those reports, and your business report at Dun & Bradstreet, PAYDEX. Stay on top of these reports and dispute charges with paperwork and clear communications. Do not just allow them to stay wrong! You can resolve this! And while you’re at, it you should also be keeping an eye on the credit reporting agency which only handles personal and not corporate credit, TransUnion. If you do not know the way to request a credit report, do not stress. It is simple– just use the above links.
Credit utilization rate merely means the quantity of money you have on credit which is then divided by your total available credit. Lenders typically do not want to see this go above 30% (so for each $100 in credit, do not borrow on greater than $30 of that). If this percentage is increasing, you’ll need to spend down and satisfy your financial obligations before borrowing more.
Once you know what influences your commercial credit score, you are that much closer to building better corporate credit.