5 ways to build business credit
5 ways to build business credit
There are lots of reasons why your business needs good credit. For example, when you’re borrowing to grow, you’ll get better terms. Also, when you’re buying products or services from another business, you’ll be in a stronger position to negotiate so you don’t always have to pay in advance.
But what if you’re just starting out and don’t have credit? Or what if your credit isn’t as good as it could be? Not to worry — here are five ways your business can build credit.
1. Show you’re legit
Make sure your business is registered. This doesn’t mean you have to be incorporated; you can register a sole proprietorship, partnership or cooperative, too. Also, establish a business banking account and start using it to pay all your business’s bills.
2. Pay bills on time
Make the due date every time, whether you’re paying a big or small vendor. Paying bills on time demonstrates to lenders that you’re fiscally responsible. Missing due dates, especially if it happens on a regular basis, pulls down your business credit score.
3. Use a business credit card
Using personal credit cards to cover business expenses won’t help you establish business credit. You need a card that’s just for your business, that you use regularly, and that you always pay on time. Commercial loans and commercial lines of credit, used responsibly, can also help you build credit.
4. Check your credit
The same credit bureaus that track personal credit also track business credit: Equifax and TransUnion. Ask to see your business credit report from time to time. This won’t affect your credit rating and is important so you can correct any errors.
5. Ask for help quickly
If your business runs into financial challenges — and what business hasn’t? — come and see us. We’ll work with you to bridge cash flow gaps in ways that don’t hurt your business credit. We never judge. We’re single-mindedly focused on solutions to help get your business back on track.