Much like individuals have a personal credit score, every business has a credit rating that determines how financially responsible the company is. Lenders will look at this credit score to decide whether or not you will be a safe business to provide funds for so this could have an enormous impact on the success of your brand because it will determine whether or not you get access to credit cards, loans, business vehicles, office spaces and other significant expenses along with the rates that you pay. Therefore, it is worth knowing how you can build your business credit score so that you can get approval when needed and access to the best rates. Here are a few of the best ways to build your score:
- Check Your Report
The first step to take is to check your business credit report so that you can find out your current rating, look for omissions and errors, and to look out for any signs of fraud. You will have to pay to view your business credit report, but it is a crucial step to take as you might find that there are simple errors that can be corrected, which will make an immediate difference. It is a smart idea to check this report regularly so that you can monitor your progress and spot any inaccuracies.
- Use A Business Credit Card
It can be handy to have a business credit card to pay for expenses, but they can also be highly effective for building your credit score. Using this card often and making sure that payments are made in full and on-time will help any business to improve their score and can be used to build from scratch. Additionally, it is quick and easy to get approved for a business credit card from somewhere like biz2credit.
- Pay Bills on Time
Much like with your personal credit rating, you must pay all bills on time to show that you are a responsible borrower. Businesses usually have many regular expenses to cover each month, so you need to set up automatic payments to ensure that you never miss a deadline.
- Limit the Amount of Credit That You Use
While it is a good idea to use credit often to build your score and demonstrate that you are a responsible borrower, it is also essential that you do not take on too much debt. In addition to being challenging to manage, this can also make lenders concerned as you are overextended and could default on a loan. Try to use less than 30% of business credit limits so that you are limiting debt while still building credit.
Combine these methods, and you should quickly start to build your business credit score. This is good practice and will come in helpful down the line if you ever need to take out a loan, buy a company car, open up a new office space, or anything else which will involve approaching lenders.