by Linda French Jun 19, 2022Share On:
It sometimes appears to be an insurmountable challenge to improve your business credit score for business needs. To get a business credit boost, you'll need to get accounts reporting timely payments to at least one credit reporting agency. Credit issuers, on the other hand, want to see a solid business credit score before approving you for a credit account. You can hack the cycle, save a lot of time and effort, and get to the business of generating credit for your company if you know the secret hacks.
Here are five ways to build your credit score:
Tip 1: Creating a Credible Foundation.
A business credit report differs from a personal credit report in several respects. One of the most significant differences is that personal credit grows without you noticing. Your initial credit account is almost certainly submitting your payment history to your credit report. It's simply there, and it's growing without you noticing.
Business credit is not the same as personal credit. Simply owning a business and repaying debt does not imply that you have a business credit report. What is the status of the payments? If they're reported at all, it'll most likely be on your credit report.
It's Not the Same When It Comes to Business Credit Reporting. You must set up your company correctly before a credit provider submits your business credit report.
Creating a Sustainably Funded Foundation
This started with ensuring that the company's contact information is different from my personal information. The IRS then provided me with a free EIN. After then, it was time to incorporate. Operating as a sole proprietor or part of a partnership does not provide the separation needed for Fundability™.
Following that, I created a business bank account and obtained a D-U-N-S from Dun & Bradstreet. Then I hired a specialist to ensure my website was fantastic, and I double-checked that my company email and the website had the same URL. This is one of the best ways to get business credit.
Tip 2: I Improved My Personal Credit Score to Aid in the Development of My Business Credit Score
The business credit reporting companies provided a free copy of my consumer credit reports. It was necessary to ensure that bad payment history or any other negative entries weren't dragging down my consumer credit scores.
Also, keep in mind that your credit score is influenced by a variety of factors. Payment history is the only factor that affects a company's credit score once it has been created. The higher your score, the more timely payments you record to business credit reporting agencies.
Personal credit, on the other hand, is influenced by:
All of these are in addition to your payment history. Why is personal credit necessary if company credit is handled separately? First and foremost, most traditional lenders will look at both of your credit ratings. However, at least two business credit agencies, FICO SBSS and Experian, include personal credit in their business credit score calculation formula.
The Importance of Both Types of Credit Scores
Therefore, maintaining a solid personal credit score is as important for your business credit file as it is for your consumer credit file. Start by regularly making those payments in and timely. However, keep an eye on how much credit you're using at any given time. Balances should not be kept too close to their limits.
Then, make an effort to have a decent combination. All credit cards and auto loans have the potential to be detrimental. A perfect combination could include a mortgage, an auto loan, a couple of credit cards, and possibly a home equity line of credit.
Remember that every time you register a new account, you will be subjected to a hard inquiry, and the average age of your accounts will decrease. That isn't to say you should never open something new, but you should be aware of the consequences.
Tip 3: I Checked My Business Credit Reports
I had to make sure I had one first. Then I realized that, even if I didn't have much payment history, my company credit reports could have a low PAYDEX or Financial Stress score. I wanted to be sure my credit reports from Dun & Bradstreet were accurate. I also wanted to make sure my Equifax business credit scores and my Experian business credit score accurately reflected my company's credit history. I figured I'd take care of the other credit reporting companies later. First and foremost, I needed to check my business credit history at the time.
How keeping an eye on your business credit helps improve credit score
Business credit reporting is a completely different thing. A business credit reporting organization does not provide free business credit reports. Individual credit bureaus can be paid, although this might be costly. The credit suite provides a monitoring service for a fraction of the cost of using a separate company credit reporting bureau.
It allows you to monitor your company's credit score from the major three credit agencies. Dun & Bradstreet, Experian, and Equifax are the three companies. You should be able to access your Dun & Bradstreet PAYDEX as well as any other scores these three companies provide, such as your business credit risk score and business failure score.
What Should You Look For?
At an initial glance, check for anything that might be impeding your progress. Any inconsistency or inaccuracy in data can be problematic. Then, to get a sense of where you are, make a note of how many accounts you have reporting. It's crucial to highlight that there are other business credit bureaus, but FICO SBSS is the only one that is used regularly.
Other Relevant Agencies
Other agencies collect information that may have an impact on your company's credit. The Small Business Finance Exchange and LexisNexis, for example, both provide public records and insurance information. Business credit bureaus have access to this information even if they do not issue credit reports directly. They'll know if it's out there, and that could affect funding approval.
It isn't much you can do about the information they have. However, begin today to ensure that they only receive positive information. This will go a long way in counteracting any previous bad information.
Tip 4 :To boost my business credit score, I obtained accounts that I knew would be reported to one or more credit bureaus.
This is a verified way of establishing business credit. It is, however, easier said than done. The fact that most merchants and credit cards report to a business credit agency is not advertised.
How to Locate Accounts that Produce Reports
Wealth Builders 365 maintains a database of completely vetted merchants with whom they are familiar. This includes the credit reporting agency or agencies to which they submit information. They break them into which ones you can qualify for at each stage of establishing business credit.
The first set of merchants, known as Tier 1 or startup vendors, for instance, will not conduct a credit check. Approval is based on a variety of criteria, including the length of time in operation and revenue. As a result, they're ideal for businesses that are just getting started with the process.
Of course, you can do it yourself, but it will take a long time and may not work. Applying to accounts at random and expecting approval standards, then hoping they report on-time payments if you do meet them, is ineffective and inefficient. Even if you apply for accounts for years, your business credit report will be poor.
Tip 5: I kept checking my credit reports at the major commercial credit bureaus.
I knew I didn't have time to go over my Equifax, Experian, and Dun & Bradstreet business credit reports every day. I wanted a system to keep track of when checking my credit for business accounts was necessary.
This is simply another example of how the Wealth Builders 365 may benefit a small business. Their monitoring service allows you to verify your scores and, if you run into issues, they will assist you in determining what is preventing you from progressing. Public records, for example, can occasionally pose problems.
Bonus Tip: By obtaining a business line of credit loan, I was able to diversify and improve my commercial credit bureau scores.
I could verify my small business's financial soundness after my financial statements were excellent and I had good business credit. As a result, I was able to obtain more funds than I am aware that other businesses similar to mine frequently do.
That is the problem with business credit. It isn't the only component of the methods to get business funding puzzle, but it is a significant one. A great business credit score can push a small business over the line into approval range if all of the other factors a lender analyzes are on the borderline. Therefore, you have more credit available for business needs than you would otherwise have.
A solid small business credit profile can help you acquire better terms and interest rates if everything else is in order. This is why, as a business owner, it's critical to consider all credit information. Small business success is dependent not just on the personal credit reports of the business owner, but also on the business's credit information.
What are SIC Codes, and in what way can they result in a denial of business funding? Ever wonder which SIC codes prevent you from getting a job? We have the answers you're looking for, so stop wondering. But before we continue, what exactly is a SIC code?
Good credit is an asset to any business. It helps with securing credit cards, loans and leases, and can aid negotiations for favorable terms with vendors. It can also prevent business owners from having to put their assets or creditworthiness on the line by separating their business's credit from their credit reports and scores.