Did you know that businesses have credit scores too?
That’s right, much like your personal credit score your business has a credit report so banks and other lenders can see how risky it can be to lend you money. Kind of like that friend who never stops reminding you of the $5 you still owe him from 3rd grade. Only, with less guilt tripping, and your business is at stake. Usually, the number is between 1 and 100, with a few exceptions and sub-scores in specific categories.
Today I’m going to help open more doors for your business.
What goes into your credit score?
Here are some of the things they base the report on.
• Company Size & Age
• Payment History
• Age of Financial Accounts
• Credit Utilization
• Industry Specific Risks
The better your score the better financing terms you can expect.
So how do you build credit?
Setting up your business properly is very important. After all, banks only want to give real money to a real business. Wait, is money real? Anyway, it is critical to separate your business from your personal identity by creating an LLC or Corporation. Make sure to keep your finances separate. If you own a large or established business you’ve hopefully got this step covered.
Always pay creditors and vendors on time.
This includes your taxes. Try to work with some vendors that report payments to a credit bureau. If you open a business credit card and use it every month, that can have a big impact as well.
If you haven’t already, start now. Age matters.
How To Add Even More Credibility!
To make your business look even more credible, register with established business bureaus, like the big three, D&B, Equifax, and Experian. Surprisingly, having a dedicated business phone line helps a lot as well. In fact, some agencies even require it!
These small details add up to big credibility.
Check Reports Regularly.
Don’t leave your fate in the hands of human or computer error. You can pay these companies to access your reports and check for mistakes. Contact them ASAP if you feel something isn’t right!
Do Inquiries Impact My Business Credit?
Every time you pull a pull a personal credit report, you think twice, and then three times, and then try not to vomit. The number of inquiries ruins your score after all! A business credit report, thankfully, doesn't have the same impact on your score. However, some agencies do reflect the number of inquiries in the final score.
Also, lenders won’t like to see too many inquiries, it can set off alarm bells.
Go for the High Score
Use these tips to improve your business credit score. Formalize your business, utilize business credit cards, pay everything on time or early, and do the little things that add to your credibility.
The better your score, the easier it will be to get that loan you need to keep your business running or reach your next big leap!
