Easy Ways To Improve Your Business Credit Score

Grow Your Business

May, 08 2018

*Editorial Note: This content is not provided or commissioned by the credit card issuer. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by the credit card issuer. This site may be compensated through a credit card issuer partnership.

As a business owner, you know the importance of a great juggling act.

You are responsible for keeping all the balls in the air from product development to marketing and sales to customer retention. It's time to add a new ball into the mix. Don't worry. This one's easy to catch.

Building a strong business credit score is essential. "It's really important to establish payment activity in your business name," says Bob Crutchfield, vice president of data and analytics at Equifax Inc.

In good times, a strong business credit profile could help you secure new capital to grow. In tough times, it could act as a financial safety net that makes it easier to borrow funds to keep your business afloat.

Some suppliers may not want to work with you unless you have an established business credit profile.

Let's say you walk into a bank inquiring about a business loan, but have no business credit profile. Red flags will start waving. The same applies if you deal with vendors and suppliers. Some suppliers may not want to work with you unless you have an established business credit profile.

For 25-30% of the inquiries or "hits" that come in for a business credit report, there is no profile in existence, says Crutchfield. If a bank or supplier is checking up on your business payment history, 1) you want it to exist and 2) you want it to be strong.

Here are six easy ways to strengthen your business credit profile:

  1. Apply for a business credit card. This may be the easiest and fastest way to create a business credit profile. Good to know: Equifax treats this as a "soft inquiry" against your personal credit line. It is not something that would impact your consumer credit score.
  1. Pay your business bills on time. This is a no-brainer, but worth repeating. Consider setting up automatic payments so you can easily knock another item off your to-do list.
  2. Establish phone service in your business name. Simply opening your landline or cell phone account under your business name will help you establish regular payment activity.
  3. Use your company name for utilities accounts. The same goes for opening accounts at the electric company. All these add up to a more robust business credit profile.
  4. Ask suppliers or service providers this question: "Do you report data to commercial credit bureaus? When Carpenter Bob pays his lumber supplier on time, that data can help build his positive business credit profile. That's a good thing.
  5. Consider establishing multiple credit cards as your business grows. This helps credit bureaus see a fuller financial picture. If you have only one card, with several late payments that provides a negative picture. If you have 6-7 cards and only one account has a negative ding that is a fuller picture of your true credit patterns.

Opening a business credit card may be the fastest and easiest way to start building a business credit profile. Business credit cards are designed to offer business owners the rewards they need most.

What is it that your business needs most? Cash back, points, 0% intro APR period, airline miles. You get to choose.

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