How to Build Better Business Credit
Did you know that your business has its own credit score? Just as your personal score is important for purchasing a home, car or other things for you and your family, but business credit score is important for getting loans to help you purchase property and inventory for your company. If your company’s credit isn’t as good as it could be, use these tips to improve it.
Check Your Credit Reports
The first step to better credit is to check both your personal and business credit reports by using companies such as Experian or Equifax. Look for errors in your personal information or your company’s information and check for inaccuracies. If you do find anything that doesn’t fit or that you don’t remember, report it, as it could be a case of fraud. It’s better to be safe than sorry.
Monitor Your Credit
After your initial check, you should monitor both credit profiles regularly. Credit reporting agencies typically offer monthly subscriptions that allow you to check your reports every month. This is especially important when running a business because you can catch and fix discrepancies very quickly and protect yourself and your business.
Keep Personal and Business Finances Separate
When running a business, you should have at least two checking accounts: one for personal transactions and one for business transactions. This not only helps to keep your credit scores separate but makes your job easier when it comes to bookkeeping, applying for business loans or dealing with the IRS. Not only does it protect your business should your personal credit take a hit, but it protects your personal credit if your business fails for some reason.
Pay Bills on Time
The way you pay your bills greatly affect your credit score. Always pay both your personal and business bills on time. If you have enough cash flow, paying them in advance is even better and can greatly improve your company’s credit score.
If you already do everything else you should for your business credit score but would still like to see a higher number, consider taking out a loan. Before you do, ensure any potential lender reports your payment activity to credit agencies. Doing so will help to improve your score.
Add Trade References to Your File
Trade references help to create an even stronger credit score for your company. These show that you have a good payment record with vendors. Keep in mind that vendors aren’t required to share this information. However, you can add the information yourself, so be sure to do so if needed.
Building better business credit ensures your company has plenty of opportunities to expand and thrive in the coming years. Be diligent to keep your business in good standing.