Key Takeaways:
- Building a business credit score helps lenders, suppliers, and creditors evaluate the capabilities of a business’s ability to pay on time.
- Learning about your business credit rating will help you catch and improve any errors or potential credit dips.
- Using your credit card for business finances responsibly can improve your business credit score.
- Your suppliers are more likely to report positive information about your business to credit bureaus if you are on good terms with them.
- Lenders will be more likely to work with you if they see that you’re responsible when making payments.
Business owners often seek external funding sources to grow their businesses. However, you’ll need a good business score to qualify for a business loan or any other financial service.
Building a business credit score helps lenders, suppliers, and creditors evaluate the capabilities of a business to pay on time. Knowing how to increase your credit score means that you can secure bigger loans, flexible repayment schedules, and lower interest rates.
Here are some professional tips to help you build a business credit score for business credit repair or qualify for better financing options.
Regularly Track Your Credit Rating.
Keeping track of your credit report routinely will help you catch and improve any errors or potential dips. It will also help you avoid high-risk credit card or loan interest rates.
You must also check your credit score to ensure it doesn’t impact your credit rating. Building a business credit score can be challenging, especially for new businesses.
Various hard and soft credit checks can impact your credit rating. Utility companies and lenders initiate hard credit checks during the loan application process. They offer a complete picture of your financial responsibilities.
On the other hand, soft checks include information such as the ones that pre-qualify candidates for various credit options or when you check your credit score.
Learning about your business credit rating will help you further your efforts for business credit repair. You can find out various opportunities for building a business credit score quickly. It allows you to make more informed business decisions that can positively impact your credit rating.
Here are some easy tips for establishing your company’s credit history!
Separate Your Personal and Business Finances
Some business owners use the same bank account for business and personal transactions. You may also be tempted to use your credit card to pay for a large business purchase.
Using your credit card for business finances can influence your business credit score. It varies based on the type of business as well.
For instance, if you own a limited company, lenders can check your credit score and gauge any risks. Meanwhile, suppose your business has poor credit. In that case, you might get smaller loans than requested or be denied a loan entirely.
Having a separate business credit card is essential. Credit reporting agencies may also examine your finances and credit score to assess your creditworthiness.
This is also the case with startups and new businesses, as they don’t have any meaningful financial history for repayments and loans.
Applying for a business credit card and using it for business transactions will keep your business credit separate from your credit. Your credit utilization ratios will remain in check as long as you make timely payments.
This also allows business credit repair when building a business credit score. Your business will improve if you continue to make your payments on time and keep credit utilization ratios in check. Moreover, your personal credit history will not affect your business credit score.
Building A Good Relationship with The Suppliers
Another way to build a business credit score is by developing long-lasting relationships with your suppliers. When you have a strong relationship with your suppliers, they are more likely to report positive information about your business to the business credit bureaus.
Suppliers are usually more willing to work with businesses with good credit scores. This is because they know that these businesses are more likely to pay their invoices on time. As a result, they are less likely to suffer from late payments or bad debts.
To develop a good relationship with your suppliers, you should always pay your invoices on time. It would help if you tried to negotiate better payment terms whenever possible. Doing these things will show your suppliers that you are serious about maintaining a good business credit score.
If you still fail to report your payments, you can manually add trade references with the company’s credit file with the agencies. The credit reporting agency will contact the supplier to verify your credit information.
You must also reach out to suppliers before adding trade references manually. It’s because sometimes the suppliers may not be able to respond to the credit agency.
Reducing The Number of Credit Applications
Every time you apply for credit, it will appear as an inquiry on your business credit report. If you have several inquiries, it will lower your business credit score. So, try to reduce the number of credit applications that you make.
You should apply for business credit only when you need it. Also, get pre-approved for business loans and lines of credit before applying. This way, you’ll know exactly how much credit you will get approved for. And, you won’t have to worry about too many inquiries adversely affecting your business credit score.
One way to go around applying for credit is by requesting a quote from lenders about how much you can borrow. This helps lenders avoid running official checks on your business’s creditworthiness.
Be Cautious of Your County’s Court Judgments.
Your county’s court judgments and liens against your business can significantly impact your credit score. You’ll need to take specific steps to clear them as soon as possible. Pay your bills on time, every time. This is the best way to improve your business credit score.
Lenders will be more likely to work with you if they see that you’re responsible for payments. Good payment history is one of the best indicators of future success when borrowing money.
Keep your business and personal finances separate. It may seem common sense, but it’s crucial to remember that your business is its entity. That means keeping business and personal finances separate in terms of accounts and credit cards.
Not only will this help you stay organized, but it will also make it easier for lenders to see that you’re serious about your business. It’s also essential to use a business email address and phone number when dealing with creditors.
Make sure your business is also registered with appropriate government agencies. This includes the IRS, your state’s revenue department, and other relevant agencies. It will show creditors that you’re a legitimate business owner who is serious about building a business credit score.
Trifecta Credit Solutions specializes in credit repair and has helped several clients fix bad credit scores in Allentown, PA. With our credit repair services, you can enjoy the best financing opportunities. Get a free consultation today!
