Whether you own a seasoned business or are just starting out, it is essential to make sure that your business credit remains in good health. Managing your business credit should be included in the overall operation of your business and should be considered a top priority. Maintaining a good credit score means a number of things for your business including the ability to purchase equipment, obtain utilities, and secure loan approvals.
Your business credit score will be the determining factor in many financial transactions and will always be one of the first things that a lender or banker will consider. Managing your business credit score does not have to be a difficult or complicated process. We have narrowed down the basics to 5 easy steps.
1. Determine whether you have business credit or not
There are a number of different agencies that track your business credit, but the biggest one is Dun & Bradstreet. In order to determine whether you have business credit, you should check with D&B by calling or visiting their website. In the event that your business does not have a credit file, you will want to apply for a D-U-N-S number. This is a unique identification number for your business and acts much like a Social Security number.If you determine that your business already has a credit file, you should review it and verify that all of the information contained in it is accurate. Lenders will make more informed decisions if all of your credit information is kept up to date.
If you determine that your business already has a credit file, you should review it and verify that all of the information contained in it is accurate. Lenders will make more informed decisions if all of your credit information is kept up to date.
2. Establish credit history from inception
Many new businesses are established using personal credit and cash on hand. But it is crucial to establish business credit by putting utilities and credit cards in your business name. It is also recommended that you use a business checking account to pay bills. Establishing credit from the very beginning will help you to track and monitor your credit score and will make any discrepancies easier to spot.
3. Pay bills on time or early
Your credit history is a very important part of your business reputation and should be treated with priority. By paying your business’s bills and invoices in a timely manner, you can ensure that you maintain the good reputation that is so important to success.
4. Monitor your credit and keep it up to date
Your business credit is ever changing and depends upon your ability to pay bills and loan payments on time. It is imperative that you make credit monitoring a priority for your business. Make sure that all of your credit information and payment history is up to date and accurate. Even a small mistake or unrecorded transaction can change your credit score enough to create issues for your business. If you find an error, you should report it to the credit reporting agency immediately. They will likely ask for some proof of the error so be sure that you have that prepared before reporting.
5. Monitor your client’s credit and vendor’s credit
Who you choose to do business with will reflect on your business whether you realize it or not. Take the time to check your vendor’s credit to ensure that they are paying their bills on time, and always do your best to monitor your client’s credit as well. Monitoring your client’s credit may seem invasive, but it will help you to determine whether you should trust them to make payments on time. This is protection for your business credit and, ultimately, your business’s reputation.
Take the time to monitor and update your credit information as often as possible and report any discrepancies as soon as possible. By following these five easy steps, you will be well on your way to building and maintaining your business credit.