Just as you have a personal credit score, your business has a business credit score. Your business score, much like your personal score, can help you get approved for a lease as well as qualify for various types of financing.
Building your business credit is vital for or your company. Not only can it help you get a loan or other form of financing, but it can also keep you from having to sign personal guarantees that put your personal assets at risk. If you’re looking to strengthen your business credit score, here are a few tips that can help.
Establish Your Business Credit
Unlike your personal credit, establishing your business credit takes a little more work. If you haven’t already, here are a few steps you might need to take:
- Incorporate your business or form an LLC.
- Obtain a federal employer identification number (EIN).
- Open a business banking account.
- Register with Dun & Bradstreet.
Obtain a Business Credit Card
When you first start a business, you might need to rely on your personal credit card(s) to pay for things you need. As you get things up and running, however, you should apply for a business credit card. Not only will that help you establish business credit, but it can also help keep your personal and business finances separate.
Ask Vendors to Report Your Payments
Not all people you pay report your payments to the credit reporting agencies. Ask your vendors if they’d be willing to do so, or consider finding vendors who will. Then, make sure that you make all of your payments on time (if not early).
Keep an Eye on Your Business Credit Reports
Once you establish your business credit, make sure to keep an eye on it. You can obtain a copy of your reports from Dun & Bradstreet, Experian, and Equifax for a fee, or you can use a site like Nav to get your Dun & Bradstreet and Experian reports for free. By keeping an eye on your score, you can monitor the financial health of your business and make sure that your credit history stays on point.
Build Your Credit and Grow Your Business
Taking the time build your business credit can go a long way to help you run and grow your business. You’ll have an easier time getting approved for financing, qualify for better rates, and get what you need to ensure your business succeeds.