Business Tips on Managing Credit

Business Tips on Managing Credit

Managing small business finance can be a challenge especially for new entrepreneurs.  In this article, we present tips on how you can establish business credit and organize your finances more effectively.

1. Register with Dun & Bradstreet.  It’s important to establish a separate business credit history for your company. Register with Dun & Bradstreet, a business credit bureau and find a lender or a credit card company that reports to a bureau.

D&B’s Data Universal Numbering System is a widely recognized system used by registered businesses and companies in the US.  You can apply for a D-U-N-S® Number by submitting an application form from D & B’s website.

You can also apply for D-U-N-S Registered™ logo for your business website.  Having the D & B’s official logo will add up to your company’s credibility and authenticity, especially if you are a newly established business.

2.  Apply for a business credit card.  Having a credit card account that is exclusively for business is an efficient way to build business credit score.  As you use your small business credit card to pay for business expenses, you are also building up your business credit score.

It is technically easier to acquire a business credit card than a business loan.  If you are a start-up entrepreneur, you can still get approved for a small business credit card if your personal credit history is in good standing.

You can also apply for a secured business credit card since approval for this type of account is not based on credit history, but on the cardholder’s capability to provide a security cash deposit.

3.  Ensure credit reporting service.  When choosing creditors and suppliers to do business with, make sure that your payments will be accurately reported to a business credit bureau.  Most importantly, pay off your bills on time to build good credit.

Another crucial strategy to boost your business credit rating is to keep your credit usage minimal.  Make it a point to pay your monthly credit card balance in full not just to avoid interest rate charges but to protect your business credit as well.

4.  Apply for a business loan.  After a few months to a year of building business credit score, you should be able to get approved for a business loan more easily.  Keep in mind that small business credit cards can be used as tools for short-term business expenses.

This does not mean, credit cards can complete replace business loans.  For bigger projects that require larger financing, it is best to acquire a traditional loan from a reputable lender.

Most banks and lending companies strictly require a solid business credit standing so if you are a new business, your application may get declined.  However, if you can show an impressive credit score, a business loan provider would have more confidence in your capability to manage debt and credit.

As soon as you get approved for a business loan, be sure to submit your monthly payments on time.  By doing so, you also continue to improve your business credit history and business credit score.


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