Building Business Credit
Hi there,
You can establish business credit with any type of business structure. Establishing good credit early on can help you secure financing if or when you need it. Like your personal credit score, your business' rating can be the determining factor in loan applications. Bad credit can affect insurance rates and potential relationships with vendors or suppliers.
Here are some tips on how to build good business credit:
- Create a business bank account. Keep your business and personal expenses separate by opening an account for your company. This way, your credit rating and your business' rating will not reflect on each other.
- Pay bills on time. This may seem obvious, but a great way to build credit is to make payments on time. Timely payments are reported to credit bureaus, which will help you become more attractive to potential lenders.
- Monitor your credit. Periodically check your personal and business credit reports to maintain good credit and protect yourself against identity theft. Visit the Annual Credit Reports website for free reports and check your score on all three major business credit reporting agencies: Dun & Bradstreet, Experian and Equifax.
- Avoid liens and bankruptcy. Liens and bankruptcy filings under your business' name can stay on your business' credit score for years. Make sure you pay all taxes and business debt if you can.
Though bad business credit is not a barrier in funding your business with invoice factoring, it can create problems in other areas. Bad credit can seem like a large hurdle to overcome, but it's never too late to start improving your business' credit score. Hopefully these tips can help you practice good fiscal behavior, which is a key element to growing a successful business.
Best of luck,
Daniel Eke
Factor Funding Co.
