Making the effort to build your business credit score has a number of advantages. It makes it easier for your company to be approved for a business loan or line of credit and separates your business and personal finances. It also enables you to receive better terms from suppliers and lower rates from insurance companies. Here are some tips on how to build up your business credit score.
Identify and Register Your Business
To separate your personal and business identities and finances, open a separate phone line and bank account in the legal name of your business. Register with the federal government to obtain an employer identification number, or EIN, and with Dun and Bradstreet to get a nine-digit DUNS number. Depending on the size and structure of your business, consider incorporating it or forming a limited liability company, or LLC.
Deal With Companies That Report Payments
Along with your business bank account, apply for a credit card specifically for your business. Keep the credit utilization ratio low, and always make payments on time. Ask suppliers and vendors to report your company payment history. If they don’t, consider switching to suppliers that are willing to report. Paying vendors on time is essential, but paying them early gives your business credit score an additional boost.
Manage Cash Flow
A healthy business credit score gives you the advantage of being able to obtain favorable terms from vendors, which helps your company maintain a healthy cash flow. Business credit cards also offer you a means of aiding your cash flow with quick financing when you need it.
Check Credit Reports
Once you have established and built up your business credit score, periodically check credit reports to make sure that all the information on them is accurate. Mistakes can negatively impact your score. If you find any errors, report them to the appropriate business credit bureaus so that they can be corrected.
For more advice on building up your business credit score, contact Legacy Capital Lending.