Building business credit isn’t something that happens overnight. It takes time and requires you to make good business decisions. If you’re a business owner, you probably don’t want to add yet another task to your role. However, building good business credit is worth the time and effort because it can help to advance your business goals. It can even lead to lower interest rates and insurance premiums. The information below will shed light on different ways to establish a good business credit score.
Establish a Business Credit Score
Obtaining a high credit score requires you to first establish business credit. It’s possible to be in business for years without having business credit. This often happens when a business owner uses their personal credit cards instead of business credit cards. This can be problematic because there are some financial institutions that make decisions based primarily on your business credit.
One of the steps that can be taken to establish business credit is forming a limited liability company (LLC). You can also apply for an employer identification number (EIN). This is a good way to separate personal financial matters from business financial matters because you will no longer need to use your social security number when applying for credit. Notably, an EIN is used by the IRS to identify businesses. Opening a business bank account and registering with Dun & Bradstreet can also help you develop business credit.
Correct Errors on Your Business Credit Report
If you have already established business credit, obtaining a good score will require you to monitor your credit report. This is because there’s a chance that it has errors that will lower your score. You can obtain a copy of your business credit report from Dun & Bradstreet, Equinox or Experian. If you need help understanding your business credit report, consult with Pine Advisors for guidance you can trust.
Find Vendors That Report Payment History
No all vendors report business payment history to credit bureaus. To build your credit score, find vendors that do in fact report payment history. Unlike personal credit, there’s a chance that you will make payments to a vendor for years without it being reported. To prevent this from happening, ask vendors whether or not they report business credit before opening an account.
Obtain Business Credit Cards
When it comes to business credit cards, there’s a greater chance that payments will be reported. Subsequently, obtaining business credit cards is helpful, especially if you pay off the full balance monthly. What’s also beneficial about having business credit cards is that there are often rewards programs available. This can help you get discounts on travel and hotel accommodations, while building your business credit.
Make All Payments on Time
Pine Advisors says that whether you establish accounts with suppliers or open business credit cards, it’s imperative that you make all payments on time. Consistently making payments in a timely manner will help you obtain a high score, which is considered anything that’s 80 or higher. The Dun & Bradstreet business credit score has a range from 1 to 100.
These tips will help you get your business on the way to getting a good to excellent business score. Keep them in mind as you begin to grow your business.