Make sure that your current actions are propelling you toward your future goals, not away from them. In this guide, we’re looking at eight quick and easy tips you can implement right away to establish business credit and ensure you’re following the right business credit building program.
What is a Business Credit Score?
Establishing a good business credit score is the first step toward securing the financing you need. It refers to the financial history of your business and whether or not lenders feel you are a risk they are willing to take. Your business credit is an indication of your organization’s ability to repay its debts and other financial responsibilities. It’s the key to unlocking financing, but can unfortunately also be the one thing that stands in your way.
Why establishing business credit is important
Establishing a healthy financial history is a vital part of securing a thriving future. Like anything that grows, it needs to be nurtured, cared for, and properly maintained for it to branch out into new and exciting opportunities. Many business owners believe that a ‘normal’ credit score is good enough. The reality is that lenders are looking for exceptional. Good doesn’t always cut it anymore. Here’s why establishing a healthy and above-average credit score can benefit your business.
- It decreases the cost of your business insurance
- You will receive better agreements with your suppliers
- You qualify for higher loan amounts
- You have lower interest rates when borrowing money
So, what’s the secret to improving your financial credit history and securing finance for your business? Let’s take a closer look.
8 Quick tips on how to establish business credit.
What is the best way to build business credit? Here are our tips for business credit and how to establish business credit.
- Pay early and pay often
Let’s keep it simple. One of the most powerful and underestimated tools when building your business credit is as simple as paying your bills. Not on time, not late – but early. This proves to lenders that you’re not only reliable but proactive when it comes to your financial obligations. Paying your bills early is also a foolproof way of making sure it’s
- Understand the importance of credit utilization
Credit companies or financial lenders don’t want to get the impression that you’re struggling to make ends meet. That’s where the role of credit utilization comes into play. Similar to your personal credit cards, it’s recommended that you use no more than 30% of your credit limit. This allows you to fully benefit from your credit score. It’s seen as responsible spending and will act in your favor when applying for financing.
- Monitor your credit frequently
Be proactive when it comes to your credit and financial history. This will help you track your progress or spot any errors. If you do spot a mistake, it’s crucial that you dispute it with the credit bureau. If you’d prefer 100% security in knowing all the right boxes are ticked and nothing is going unnoticed, consider scheduling a free consultation with us where we’ll investigate, report, and repair on your behalf.
- Create healthy tradelines
Did you know that third-party vendors can help you build your business credit? Multiple traders offer the option for you to pay via trade credit, which means you can pay in installments or in full, after your receive the inventory. Choosing to work with businesses and suppliers who report your payments to a business credit bureau is a great way to establish credit. These relationships are known as Net-30 accounts. If you make your payments on time with these net-30 vendors, they will report it to business credit bureaus like Dun & Bradstreet.
- Get a D-U-N-S number.
Think of it as a social security number, but for your business. You can receive this number by registering your business with Dun and Bradstreet. This is free for all businesses and is a unique nine-digit number that is used by business credit bureaus to monitor and identify your payments and generate scores from your payment history data.
- Establish credibility
In order for your business to qualify for a financial loan, you have to make sure your business is registered as a formal business entity. This includes using the right business structure, such as a limited liability company (LLC) or a corporation.
- Know What to Avoid
Certain things can hurt your credit score without you even noticing. Invest some time in researching what NOT to do as much as you’re reading up on what you SHOULD do as well. One thing that we recommend avoiding is paying for business expenses with personal credit cards. Using your personal accounts to pay for your company’s debt indicates that your business may have too many expenses for it to cover. If noticed, the chances are slim that you would be extended more credit.
- Consider using a credit repair company
We get it, running a successful business is a full-time job. Securing financing and keeping a good credit score can be time-consuming, and without the proper guidance, it can frequently do more harm than good. Trusting a credit repair company or business credit building service to build your credit and support you in securing the right financing for your business takes a lot of weight off your shoulders. It also ensures that you are using the best strategy for your specific business.
The Bottomline
The fact of the matter is that credit bureaus aren’t always on your side. Business credit can be one of the most powerful and major assets you can have as a business, which is why maintaining it and improving it is essential in achieving your financial goals. It can also prove useful when building B2B relationships.
Leave it to the experts
Luckily, you don’t have to figure it all out by yourself. At Leaf Credit Solutions, we remove the limitations of a poor credit score so you can benefit from everything the future has to offer. If you’re ready to transform your credit now, be sure to get in touch with the best credit repair company in New Jersey. We’re here when you need us.
Frequently asked questions about business credit
Do you still have some questions about how to establish business credit? See our FAQs below. If you’d like us to elaborate on any topics covered, please feel free to reach out to us here, we’d love to help.
What are the 3 business credit bureaus?
The three main business credit bureaus in the U.S. are Dun & Bradstreet, Equifax, and Experian.
What is the business credit score range?
A business credit score can range from 0 – 100.
What is considered a good business credit score?
Dun & Bradstreet assigns scores on a scale of 1 to 100, with 100 being the best possible PAYDEX Score.