How to Create A Good Credit Rating For Your Business
How To Create A Good Business Credit Rating
Good business credit is just as necessary as good personal credit. This article talks about tips on how you can your business credit in great shape:
Create accounts with business credit bureaus. Experian (business) or Dun & Bradstreet are two major business credit bureaus. Check out their websites and register for a business credit report now.
Pay your suppliers on time. Much like with your personal credit, you must make it a priority to pay your business debts on time. Keep in mind not all companies will report your account to D&B or Experian. If you are actively trying to build your business credit, make sure to ask before working with a supplier. If they don’t report, you may consider working with another company OR paying D&B and Experian a fee to track the account.
Check the licensing of your business. Secure all necessary registrations and licenses required by your State. Keep note of when all fees are due. Having worked in business financing for several years, I’m constantly surprised when customers apply to us with their business in bad standing with the Secretary of State. Most of them have NO IDEA they missed their filing date. Make sure that’s not you!
Apply for a business credit card. Business credit cards are effective tools in building a solid credit history. Before you apply, take a look at your personal credit report. Many business credit card issuers require the business owner to have good – excellent credit in order to get approved for their business card. If you have bad credit, take the time to fix as much as you can before applying. Or apply for a secured business credit card, or business debit card.
Don’t apply for too many business credit cards. Too much credit card debt can become a big factor in a businesses ability to get financing. Apply only for as much credit as you need. If possible keep to 1 business card. Keep in mind that financing companies will not only look at the debt to income ratio of you personally, but they will want to see the debt to income ratio for the business. Too much debt can get you declined for additional financing.
Pay your business credit card balances in full. The best way to manage business credit cards is to pay your monthly balances completely. This eliminates debt build-up and enables you to avoid paying interest.
Keep track of your finances. Many small business credit cards provide an online account access along with quarterly or annual account summaries. Use these tools to monitor your business expenses.
Keep your financial records. Receipts, billing statements, and other written financial reports be kept and filed in a safe place for your reference.