How to build business credit?

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The time has come to get a business loan. You did your homework; you probably looked into various financing options and lenders, informed yourself thoroughly about interest rates and payment terms.

But, did you take into consideration your business credit?

Credit Card

This is another significant variable that can be a deciding factor whether your application for a business loan will be approved or not. However, most small business owners have never heard of this term, while others who are familiar with business credit aren’t sure if theirs is strong enough to help them get a loan.

That’s why it’s crucial to learn how to build business credit before actually applying for a small business loan. Fortunately, you don’t have to be a finance expert to figure out how to build business credit, just keep on reading carefully, follow these steps, and you will be ready to submit a successful loan application.

Why it’s important to build business credit?

As previously said, a good business score can help you qualify for a business loan. This score ranges from 0 to 100 and the higher this number is, you have more chances to get the funds because it shows to lenders that you are likely to repay debt.

Not only will it ensure you a business loan, but it will also provide you better loan terms. For instance, you can get lower interest rates and, in that way, you will save money too.

Having a strong business credit can also help you get more favorable terms from suppliers or possibility to purchase inventory or new equipment on credit.

Last but not least, with business credit you can separate personal and business finances and protect your personal credit and assets.

How to get a free business credit report?

Before learning how to build business credit, you need to check your business credit, and the best way to do is to get a free business credit report. Here are some places you can do it.

  • Nav is a credit monitoring service that will give you access to your business credit history. They will provide you with a free summary of your business credit reports from both Dun & Bradstreet and Experian.
  • CreditSignal is a free service that lets you check and monitor your business credit through a mobile app or an online dashboard.
  • Scorely will provide you with a free business credit report demo, and later on, if you’re ready to commit, you can subscribe to their paid service.

How to build business credit?

Once you’ve checked your business credit, it’s time to take some steps and learn how to enhance it.

  • Incorporate your business and in that way separate your personal and business finances.
  • Open a business checking account and make sure you pay the financial transactions of your company from that account.
  • Obtain at least one business credit card from a company that reports to the credit reporting agencies and which isn’t linked to you personally.
  • Pay your bills on time or even earlier if possible. This will show to lenders that you pay back your debts.
  • Establish a line of credit with suppliers or vendors to create credit for your company.

At first, these steps can be overwhelming, but with persistence and time, you can build a good business credit score.

It’s never too late to start building business credit.

Good business credit can help you qualify for a business loan with more favorable terms and save money in that way. Plus, it can also have a positive impact on your relationship with suppliers.

Luckily, building business credit is a streamlined process that requires a little bit of your dedication and good organization. This will pay off in the long run because you will manage your finance well which will make room for further investments that will grow your business. Are you ready to start building good business credit?

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