A Guide on How to Build a Good Business Credit Score
You rely on your personal credit score for getting good rates when you go to take out a loan on a new house or car. Maintaining excellent business credit is vital for similar purposes. It is going to be a lot harder on your business to get loans or other types of financing if your credit score is poor or if you do not have any credit rating at all. For this reason, it is important for you, as a business owner, to know the basics of what you need to do to get your score up.
First, it is vital to understand that several different factors go into your company’s rating. Taking out loans and paying them back in an appropriate amount of time is the basic way to build up credit, which is similar to what individuals need to do. However, additional factors go into your score. For example, your company’s industry risk is taken into consideration. This means that if your company offers a product that has diminishing demand, then your financial prospects might not look as good.
You need to start working on your business credit rating as soon as you open the doors for business. You do not want to wait until you are in a position where you need to take out a loan because at that point, you will not have enough time to get a good score. You can look into getting a dedicated credit card for your business. You can also open accounts with supply stores or establish credit lines with suppliers. Even if you only take out small loans and pay them back quickly, that will do a lot of good for establishing good credit.
You can also look into acquiring a Federal Employer Identification Number for your company. This can be obtained for free at the Internal Revenue Service’s website. Not only will you get a dedicated number for your business, but you can also establish a business phone line. It is also a good idea to get a DUNS number, which can be obtained through Dun and Bradstreet. These numbers are recognized all over the world, and it will be used to create your company’s credit profile.
Good business credit will make it easier to get loans. You will also get better interest rates on those loans, and you may even qualify for larger loans. You may also qualify for lower insurance rates. Ultimately, it is best for your company to maintain a stellar rating.