5 Steps For Building Better Business Credit
Having great credit can open up numerous possibilities for businesses by freeing them up to pursue opportunities and by consistently attracting new clients. The better the credit, the better off the business is. Here are five things you can do for your company in order to build business credit.
For starters, choose your creditors wisely. Your goal is to build up a positive report, so you want to ensure that the lenders you borrow from are recording each transaction and your business’s regular payments to credit bureaus. This shows other lenders and clients that your company is reliable and financially trustworthy. Note that the key phrase here is “regular payments”—ensure that your company is in fact paying consistently (on schedule and preferably early.) If your business fails to make payments, it will have the opposite effect on your business credit, reflecting poorly on your company.
While you are ensuring that your business’s funding and timely payments are being recorded, you will also want to check that all your records are up-to-date in the most crucial places. Namely, the three primary credit bureaus that people will look at in evaluating your company’s creditworthiness; Equifax, Dun & Bradstreet and Experian. These bureaus will have credit profiles on your company, and you will do well to routinely check your profile and make sure that all the information is represented accurately. You can manually add funding and payment records to these profiles if that information is missing; this accuracy helps you boost your score in the long run.
Another step you can take to improve your business credit is to set up a line of trade with any suppliers you use to keep your inventory stocked. Oftentimes, you can pay for supplies after they’re in your possession, and as long as your company is keeping with the terms established by the supplier, that supplier can record the transactions and your timely payment history. The more lines of credit your business can maintain, the better its credit will be; this step alone can help your cause massively. Finally, be sure to avoid sticky situations like collections, liens and bankruptcy notations if at all possible, as all of these will end up on your business report for several years. Remember that these reports are public information (unlike private credit), and you want them to look as good as they can.
In summary, simply make timely payments to creditors and take advantage of credit options that will help your business’s credit score. With just a few intentional steps and some patience, you can easily build your business credit and expand your opportunities.