Is Your Business Credit Score Getting in the Way of Growth?
With the resulting competition for limited funds, building and maintaining good business credit has become of paramount importance. So how do you get a good business credit score?
5 Steps to Positive Business Credit
*Stay on top of your personal credit. Even for large businesses, the personal credit ratings of owners and large shareholders can influence business credit. If you control a 20% or more share of your business, your personal credit may come under scrutiny when you apply for commercial financing.
*Create a business credit profile. Registering for a D&B D-U-N-S® number is free and easy. Once acquired, you can create a business credit profile that includes payment history, credit references, and other pertinent business information. This profile becomes a repository that other businesses and lenders can use to determine your financial reliability.
*Monitor your business credit scores and reports. Getting access to your business’s credit scores and reports can give you objective insight into how your creditworthiness is being evaluated and where problem areas may exist. With that understanding in hand, you can better develop a plan to address any issues and build your financial reputation.
*Use a business credit card. Using a business credit card for everyday expenses is an easy way to demonstrate financial reliability–as long as you are consistent in paying it off within terms, which brings us to the final step:
*Pay your bills on time. There’s simply no substitute for being fiscally responsible. Blemishes on your record like delinquent payments, defaults, and bankruptcies are difficult to overcome. Conversely, a long history of regular payments provides evidence that you are a low-risk prospect, showing credit bureaus and lenders that you are able to handle your debts.
Financial flexibility is critical to business growth. It can help cash flow, provide capital for seasonal expenses and equipment purchases, and facilitate expansion into new markets. These are just a few examples of the potential benefits of business credit.
Yet with banks tightening the reigns on credit issuance, many businesses are finding themselves hard-pressed in trying to secure financing. Lending practices have become much more restrictive on everything from business credit cards to loans and lines of credit, lowering acceptable risk thresholds and leaving many without access to crucial resources.
Yet with banks tightening the reigns on credit issuance, many businesses are finding themselves hard-pressed in trying to secure financing. Lending practices have become much more restrictive on everything from business credit cards to loans and lines of credit, lowering acceptable risk thresholds and leaving many without access to crucial resources.
5 Steps to Positive Business Credit
*Stay on top of your personal credit. Even for large businesses, the personal credit ratings of owners and large shareholders can influence business credit. If you control a 20% or more share of your business, your personal credit may come under scrutiny when you apply for commercial financing.
*Create a business credit profile. Registering for a D&B D-U-N-S® number is free and easy. Once acquired, you can create a business credit profile that includes payment history, credit references, and other pertinent business information. This profile becomes a repository that other businesses and lenders can use to determine your financial reliability.
*Monitor your business credit scores and reports. Getting access to your business’s credit scores and reports can give you objective insight into how your creditworthiness is being evaluated and where problem areas may exist. With that understanding in hand, you can better develop a plan to address any issues and build your financial reputation.
*Use a business credit card. Using a business credit card for everyday expenses is an easy way to demonstrate financial reliability–as long as you are consistent in paying it off within terms, which brings us to the final step:
*Pay your bills on time. There’s simply no substitute for being fiscally responsible. Blemishes on your record like delinquent payments, defaults, and bankruptcies are difficult to overcome. Conversely, a long history of regular payments provides evidence that you are a low-risk prospect, showing credit bureaus and lenders that you are able to handle your debts.
