If you have your own business, ensuring you have a good credit score is essential. It will start you out on the right path by helping you get approved for loans and hopefully pave the way for a smooth running business in the long run. As soon as you are approved with a line of credit, your credit score is officially on the hook for the long haul.
Below are some great tips for improving your business credit score.
Make Sure You Are Paying Your Bills On Time
The first step here is to know when your payment deadlines are. Make it a habit to make your payments before they are due so that you avoid any penalties to your credit score. I love plugging all my bills and due dates into an excel spreadsheet. It makes it so easy to have that readily available as a reference. Also, I am sure you know that late payments incur a late payment fee and those can add up real fast.
The great thing about refinancing a loan is that with a good credit score, you receive a lower interest rate. This in turn makes your debt much easier to pay off as time goes on, and of course saves you money. Ca-ching!
Stay Away From Opening New Accounts.
Now that you have a business, when you get your business card, do not open more accounts. If you do start applying for more cards, those credit applications are not benefiting your credit score. You will certainly be inundated with attractive offers, but you want to keep it to a minimum in order to maintain a steady credit score.
Do Not Close Your Old Accounts
It may seem like a good idea to close an account once it is paid off…but hold off. Credit history is taken into account when formulating your credit score, so keeping those paid off cards open can prove beneficial. It will show potential lenders that you can pay debt off on time.
Do Not Mix Business and Personal Finances
It is important that when you open your business account, you make sure to use your Employee Identification Number (EIN) and not your Social Security Number. Keeping your personal finances separate from business finances will help you maintain a good credit score on both ends. If you were not to do this, a negative credit score on the personal side will certainly affect your business credit score as well.
Keep An Eye On Your Personal And Business Credit Scores And Resolve Errors ASAP
Keeping tabs on your business credit score is key to ensuring it remains unblemished. Doing this, affords you the opportunity to evaluate any money habits that may be affecting your credit score and it will also help you stay on top of any errors that may be negatively affecting it as well. Always keep in mind that any fraudulent accounts or mistakes on your credit report can really do damage to your credit score. If you find yourself in this position, it is imperative that you contact a credit repair company. They will quickly identify any mistakes, remove any negative reporting and they will also keep track of any activity on your credit report. Credit Repair companies help you understand your credit report and can help you come up with a plan to put your credit back on track. Now do not forget about your personal credit report. There are lenders that will be looking at both your business and personal credit reports, so keeping a close eye on both of them is crucial.
Try To Borrow from the lenders that Report To The Credit Bureaus
Small business loans play a big role in building up your business credit when you make your payments on time. When you do so, your lender is sending a nice report card back to the business credit bureaus. The only thing is that not all lenders do this reporting, so when taking out a loan, make sure you are going with a lender that does.
Monitoring your credit scores can be a time-consuming process, but taking steps now to monitor and improve your business credit score is nothing but a smart idea. The better your company’s credit score, the better the terms you’re likely to be offered from both vendors and lenders.