Taking the mystery out of building business credit programs

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Taking the mystery out of building business credit programs

Published By Janet Gershen-Siegel at December 18, 2017

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Building business credit means that your firm gets opportunities you never felt that you would. You can get brand new equipment, bid on realty, and deal with the company payroll, even when times are a bit lean. This is specifically helpful in holiday companies, where you can go for months with simply low sales.

Given this, you really should tackle building your company credit. Enhance and maintain your scores and you will have these opportunities. Do not, and either you do not get these chances, or they will cost you a lot more. And no entrepreneur wants that. You should know what affects your company credit before you can make it better.

Credit History Length Matters

This is in essence how long your company has been making use of company credit. Certainly newer companies will have brief credit histories. Although there is not a lot you can specifically do about that, do not worry. Credit reporting agencies will also scrutinize your personal credit score and your very own record of payments. If your individual credit is excellent, and particularly if you have a fairly lengthy credit history (that is, you did not just get your very first credit card a short while ago), then your personal credit can come to the rescue of your business.

Normally the reverse is also right– if your private credit history is poor, then it will impact your business credit scores until your small business and individual credit can be split.

Do not Permit Your Credit Utilization Rate to Harm Your Small business

Your credit utilization rate just means the amount of cash you have on credit which is then divided by your total available credit. Lenders usually do not like to see this go above 30% (so for every $100 in credit, do not borrow on over $30 of that). If this percent is increasing, you’ll need to spend down and repay your financial debts ahead of borrowing more.

Your Payment History is Important

Overdue repayments will have an effect on your company credit score for a good seven years. If you pay your small 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. Ensure that to pay on schedule and you will experience the rewards of punctuality.

Your Personal Credit can Influence Your Corporate Credit

Are you having a dissatisfactory business year? Then it could end up on your consumer credit score. And in the event that your firm has not been around for too long, it will directly have an effect on your company credit. However, you can unlink both by taking steps to separate them. As an example, if you get credit cards only for your small business, or you open business checking accounts and various other bank accounts (or maybe get a business loan), then the credit reporting bureaus will begin to treat your private and corporate credit separately. Also, make sure to incorporate, or at the very least file a DBA (doing business as) status. You can also pay for your company’s monthly bills with your company credit card or checking account, and ensure it is the company’s name on the bill and not your own.

The Credit Reporting Bureaus Can Just Plain Get it Wrong

Just the same as each company around, credit reporting agencies just like Equifax and Experian are only as good as their files. If your company’s name is similar to another’s, or your name is a lot like another business owner’s, there can possibly be some errors. So check those reports, and your company report at Dun & Bradstreet, PAYDEX. Stay on top of these reports and question charges with records 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 keeping track of the credit reporting agency which solely handles personal and not business credit, TransUnion. If you do not know exactly how to pull a credit report, do not stress. It’s easy.

Once you find out what affects your business credit score, you are that much closer to developing better corporate credit.

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