Published By Janet Gershen-Siegel at November 30, 2017
Building better business credit means that your business acquires opportunities you never assumed it would. You can get brand-new equipment, bid on real property, and cover the company payroll, even when times are a bit lean. This is especially helpful in holiday companies, where you can go for months with only minimal sales.
Given this, you need to work on growing your business credit. Boost and maintain your scores and you will have these opportunities. Do not, and either you do not get these opportunities, or they will set you back you a lot more. And no entrepreneur wants that. You ought to know what affects your small business credit before you can make it better.
This is in essence how long your business has been making use of business credit. Naturally newer firms will have very short credit histories. While 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 personal history of payments. If your individual credit is excellent, and especially if you have a somewhat extensive credit history (that is, you did not just get your very first credit card fairly recently), then your individual credit can come to the rescue of your company.
Obviously the opposite is also true– if your individual credit history is bad, then it will have a bearing on your business credit scores until your small business and personal credit can be split up.
Your credit utilization rate just shows the amount of money you have on credit which is then divided by your overall available credit. Lenders ordinarily do not want to see this exceed 30% (so for every $100 in credit, do not borrow on in excess of $30 of that). If this percent is rising, you’ll have to spend down and satisfy your financial obligations prior to borrowing more.
Overdue monthly payments will have an effect on your company credit score for a good seven years. If you pay your company (and personal) debts off, as rapidly as possible and as completely as possible, then you can make a very real difference when it involves your credit scores. Be sure to pay in a timely manner and you will enjoy the benefits of promptness.
A dissatisfactory business year could end up on your individual credit score. And just in case your small business has not been around for too long, it will directly affect your business credit. Nonetheless, you can unlink both by taking measures to uncouple them. For example, if you get credit cards just for your small business, or you open up business checking accounts and other bank accounts (or maybe get a business loan), then the credit reporting agencies will begin to treat your private and small business credit on an individual basis. Also, make sure to incorporate, or at least file a DBA (doing business as) status. You can also pay for your company’s expenses with your firm credit card or checking account, and make certain it is the business’s full name on the bill and not yours.
Just Like as every entity out there, credit reporting agencies such as Equifax and Experian are only as good as their data. If your business’s name resembles another’s, or your name is a lot like another company owner’s, there can possibly be some oversights. So keep an eye on those reports, and your small business report at Dun & Bradstreet, PAYDEX. Stay on top of these reports and contest charges with records and clear-cut communications. Do not just allow them to stay wrong! You can correct this! And while you’re at, it you should also be keeping an eye on the credit reporting agency which only handles consumer and not small business credit, TransUnion. If you do not know exactly how to pull a credit report, do not fret. It’s easy.
Once you understand what has an effect on your corporate credit score, you are that much nearer to building better corporate credit.