How Long Does it Take to Build Business Credit?

How Long Does it Take to Build Business Credit? Credit Suite

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How Long Does it Take to Build Business Credit?

Published By Janet Gershen-Siegel at June 14, 2018

How Long Does it Take to Build Business Credit? Credit Suite>

You Asked: How Long Does it Take to Build Business Credit?

Your question was: how long does it take to build business credit?

Written by Janet Gershen-Siegel

How long does it really take to build business credit? Is building business credit fast or slow? Building company credit means that your business gets chances you never felt that you would.

You can get new equipment, bid on real estate, and cover the company payroll, even when times are a bit lean. This is especially helpful in seasonal business enterprises, where you can go for calendar months with simply low sales.

As a result of this, you need to work on growing your corporate credit. Improve and maintain 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 small business owner wants that. You have to know what affects your small business credit before you can make it better.

Credit History Length Matters

This is how long your company has been working with company credit. Newer businesses will have very short credit histories. While there is not too much you can specifically do about that, do not panic.

Credit reporting bureaus will also assess your personal credit score and your own record of payments. If your personal credit is excellent, and in particular if you have a reasonably extensive credit history, then personal credit can come to the rescue of business.

Normally the opposite is also true. If your individual credit history is bad, then it will impact your company credit scores until your company and individual credit can be separated.

Your Payment History is Important

Late monthly payments will influence your company credit score for a good seven years. If you pay your business (and personal) financial obligations off ASAP and make a very real difference in credit scores. Ensure to pay on time and you will reap the rewards of punctuality.

Personal Credit Can Affect Corporate Credit

Are you having a bad business year? Then it could wind up on your individual credit score. And in the event that your firm has not been in existence for too long, it will directly have a bearing on your company credit. Nonetheless, you can unlink the two by taking measures to unlink 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 even get a business loan), then the credit reporting agencies will start to treat your personal and corporate credit independently.

Also, make sure to incorporate, or at least file a DBA. You can also take care of your company’s monthly bills with your small business credit card or checking account, and insure it is the small business’s full name on the bill and not your own.

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Do not Let Your Credit Utilization Rate Hurt Your Business

Credit utilization rate just means the amount of cash you have on credit. Then divide it by your overall available credit. Lenders commonly do not want to see this go above 30%. If this is increasing, spend down and work off your debts prior to borrowing more.

The Credit Reporting Bureaus Can Get it Wrong

Just the same as each organization out there, credit reporting agencies like Equifax and Experian are only as good as their records. If your company’s name is like another’s, or your name is a lot like another company owner’s, there can potentially be some errors.

So monitor those reports, and your business report at Dun & Bradstreet, PAYDEX.

Stay on top of these reports and dispute charges with documentation and crystal clear communications. Do not just let them stay incorrect! You can fix this!

And while you’re at, it you should also be monitoring the credit reporting bureau which only handles consumer credit, TransUnion. If you do not know how to pull a credit report, do not stress. It is simple– just use the above links.

How Long Does it Truly Take to Build Business Credit?

Once you understand what affects your company credit score, you will know. And you’ll be able to answer anyone who asks: how long does it takes to build business credit.

Learn more here and get started toward building business credit attached to your company’s EIN and not your SSN.

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