Building Business Credit During the Early Phase of a Business
It’s usually fairly difficult to establish good business credit score in the first few years of the small business operation. However, if you can manage to do this, it will only help you significantly in the future, as more access to funding will be made available to you. Here are some ways that you can help establish a good business credit score right from the beginning of your small business operation.
It’s important that you separate your business credit score from your personal credit history because otherwise the two will be considered equal by any lender. Regardless of what goes on in your personal life, you will be able to maintain a good business credit score by paying your bills on time.
Open Up a Business Bank Account
It can be very important to establish a bank account in the legal name of your business and to use that business account to make all payments to suppliers and vendors. Any credit cards that you use should also be paid out of your business account, so what lenders see pertains only to your business transactions.
Phone Number and Credit File
While this may seem obvious, it’s critical that you have a phone number which is directly tied to your business, so that customers can have a direct link to the business itself rather than to your personal phone. You should also take the time to establish a business credit file with all three of the major credit bureau reporting agencies, Equifax, TransUnion, and Experian so that your business credit score will be accurately recorded.
Establish a Line of Credit
It’s a good idea to establish lines of credit with multiple vendors and suppliers so that you’re not tied to any individual as a sole means of support. You should also ask each of these suppliers to report your business transactions to the credit bureaus so that your good credit history can be built up immediately.
Pay Bills on Time
This also may fall into the no-brainer category, but it is absolutely essential that you pay all your bills on time, because if you don’t, that will be reported to the business credit bureaus, and instead of helping your business, it will damage your chances of acquiring future loans. This is so important, that almost anything you can do to get your bills paid promptly is worth doing as a business.
What is your business credit score like?
If your business credit score is less than perfect, that won’t necessarily disqualify you from being approved for a small business loan. Contact us at Fintrus to see if there may be ways we can help you secure the financing you need for business growth or for better positive cash flow.