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Why we love business credit builder programs

Published By Janet Gershen-Siegel at January 21st, 2018

Business credit builder programs can help you, because building business credit means that your company obtains chances you never knew you would.

You can get brand-new equipment, bid on buildings, and deal with the company payroll, even when times are a bit lean. This is especially helpful in seasonal businesses, where you can go for months with just minimal sales.

Because of this, you really should focus on developing your company credit. Enhance and maintain your scores and you will have these chances. Do not, and either you do not get these opportunities, or they will cost you a lot more. And no entrepreneur wants that. You need to recognize what affects your company credit before you can make it better.

Credit History Length Matters

This is in essence how long your small business has been utilizing business credit. Of course newer firms will have short credit histories. Though there is not a lot you can specifically do about that, do not despair. Credit reporting agencies will also take a look at your personal credit score and your own history of payments. If your individual credit is good, and especially if you have a fairly lengthy credit history (that is, you did not just get your first credit card recently), then your consumer credit can come to the rescue of your company.

Normally the reverse is also true– if your individual credit history is bad, then it will impact your corporate credit scores until your business and individual credit can be separated.

Do not Allow Your Credit Utilization Rate to Harm Your Business

Your credit utilization rate just shows the amount of money you have on credit which is then divided by your total available credit. Lenders ordinarily do not wish to see this exceed 30% (so for each $100 in credit, do not borrow on over $30 of that). If this percent is climbing, you’ll have to spend down and satisfy your financial obligations before borrowing more.

Your Payment History is Important

Late repayments will have an effect on your business credit score for a good seven years. If you pay your company (and personal) debts off, as fast as possible and as completely as possible, then you can make a very real difference when it pertains to your credit scores. Be sure to pay in a timely manner and you will experience the rewards of punctuality.

Your Personal Credit can Impact Your Corporate Credit

Are you having a substandard business year? Then it could end up on your consumer credit score. And in case your business has not been in existence for too long, it will directly influence your company credit. Having said that, you can separate them both by taking measures to split up them. Say, if you get credit cards only for your company, or you open up business checking accounts and various other bank accounts (and even get a business loan), then the credit reporting bureaus will start to address your private and corporate credit independently. 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 statements with your firm credit card or checking account, and ensure it is the business’s full name on the bill and not yours.

The Credit Reporting Bureaus Can Just Plain Get it Wrong

Just the same as every single entity around, credit reporting agencies just like Equifax and Experian are only as good as their information. If your business’s name is like another’s, or your name is a lot like another small business owner’s, there can potentially be some oversights. So keep track of those reports, and your small business report at Dun & Bradstreet, PAYDEX. Remain on top of these reports and question charges with paperwork and clear-cut communications. Do not just allow them to stay wrong! You can fix this! And while you’re at, it you should also be monitoring the credit reporting bureau which exclusively handles individual and not small business credit, TransUnion. If you do not know how you can pull a credit report, do not fret. It’s easy.

Once you know what influences your business credit score, you are that much closer to creating enhanced corporate credit with a corporate credit building program.

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