The Best Methods Of Building Business Credit
A strong business credit rating allows entrepreneurs to take advantage of many opportunities – higher spending limits on business credit cards, access to faster financing and for larger amounts, the ability to get extended lines of credit from vendors and lenders, and much more. The issue for many new and smaller businesses is how to grow their existing credit rating so they can access those opportunities.
Use Business Credit Cards For Business Expenses
Many new business owners try very hard to keep expenses to a minimum, while also treating business credit cards as “emergency only” funds. Instead, many entrepreneurs would rather fund their businesses by using personal credit cards, provided the cost is low enough. The problem with this is personal credit cards have a much lower spending limit than business credit cards, so entrepreneurs can quickly find their personal cards maxed out, leaving their credit scores (and finances) at risk. Also, in order to build business credit ratings, business credit must be used. By not using those cards for business purchases, the company’s credit rating will only stagnate. Making small purchases with the company card and then paying them back on or ahead of time will increase the credit score of the business.
Research Vendors And Suppliers
Not all vendors operate the same way. Some report their earnings and customer payments to credit agencies. The reason why some business owners can have very good relationships with vendors, pay their bills ahead of schedule, and never see their business credit rating budge an inch, is because their vendors and suppliers do not submit such information to credit agencies. It is wise for every business owner to research their vendors to find out if they are affiliated with credit reporting agencies, and try to use only the ones who submit information to credit agencies to help improve the credit rating of the business.
Review Credit Reports Regularly
Credit agencies are very large entities, and sometimes things will show up on a credit report that should not be there. Outstanding balances that were cleared up a long time ago will sometimes linger until they are caught and brought to the attention of the credit agency. By reviewing credit reports every three months or so, business owners will be able to monitor their business credit ratings, and reach out to credit agencies when something doesn’t seem right, so it can be removed. It should also be noted that business owners should be aware of what is on their business credit reports well in advance of applying for loans or substantial financing of any kind. The last thing business owners need is a rejection because of a bad mark on the credit report – especially if that mark has no reason to be there in the first place.
By following the above guidelines, the credit rating for your business should improve in no time, and soon you will see doors open to higher spending limits on credit cards, as well as bigger and better financing opportunities.