Establishing good business credit is essential for success in today’s business world, because it opens up several doors which can provide the opportunity for growth and sustained profitability. It isn’t just a matter of being eligible for business loans either, although that’s very important in its own right, but having good business credit also helps to establish your credibility among suppliers, other businesses, and even consumers.
Unlike personal credit scores, business credit scores are available for anyone to see, so organizations and individuals all have the opportunity to see how your company rates before doing business with you. Here’s how you can go about getting good business credit, so you can get approved for loans, and so others will consider your business a credible one.
Stay current with business credit bureaus
The best approach here is to ensure that your information is current with all three of the major business credit bureaus, since you never know which one your creditors report to. The three majors are Experian, Equifax, and Dun & Bradstreet, and each of them uses a different process for determining your business credit score. Be proactive and provide them with financial statements, as well as current company information, so when the time comes for applying for loans, they will have accurate and updated information to report.
Make payments on time
This is one of the most important things you can do to establish good business credit, and it’s one of the things that any lender will look at most closely. Paying creditors on time is viewed as an indicator of the stability of your business, and it’s a clear marker for credit-worthiness.
Maintain clean public records
Public records include all liens, judgments, and bankruptcies, and it’s very important that you don’t have any public records like these outstanding against your company. For instance, if a creditor has instituted a proceeding against you for collection of a debt, this will show up in public records, and it will be counted as a big negative by any potential lender.
Borrow from credit-reporting lenders
If you need to borrow from organizations other than banks or credit unions, for instance an online lender, make sure that they report to the credit bureaus, so that your on-time payments are noted by the credit bureaus, and operate in your favor. Not all lenders do report to credit bureaus, so choose one which will be doing you a service as you repay the loan.
Establish supplier trade lines
Establishing supplier trade lines can be a great way to build up your business credit score, especially if you have suppliers who are willing to help you improve your business credit standing. Many suppliers will allow you to pay for inventory within days or weeks of receipt, rather than at the time of purchase. If you make all these payments on time, and your supplier reports those on-time payments to business credit bureaus, you can generate considerable good credit history for your business.
Every positive line on your business credit report can help you get a little closer to approval for small business loans by banks and other traditional lenders. We’d love to help you get there.
At Business Partner Alliance, we provide targeted coaching, consulting and business advisory services to help small and medium sized business owners achieve new heights. We put our passion and experience to work to help business people achieve their goals. Let’s meet for coffee to see how we can network together.