The Value of Building Business Credit
Building business credit is something many businesses struggle with. It can sometimes be hard enough to make ends meet without worrying about your business credit. However, this doesn’t mean that it is impossible, in fact, you’ll need to learn how to be effective in multitasking in order to be successful. Here are a few tips to help you improve your business’s credit rating and secure outside funding at the same time.
Watch Your Personal Credit Rating
Many banks take into account your personal credit rating when lending funds. If your personal credit rating is positive that will serve to support your business finance application. It’s not enough for you to be timely with your payments. Also, try to ensure your personal credit cards carry a low balance. As a guideline, only use up to 30% of your available credit at any one time and try to repay on time or in advance.
Only Apply For Credit When You Need It
Many people apply for credit, either personal or business credit, “just in case”. Many also apply for unnecessary reasons. Save your credit applications for when it’s absolutely needed otherwise you risk building up a record of continually applying for credit and continually appearing to be in and out of debt.
If you haven’t applied for credit before and would like to in order to start building a credit score start small. Rather than your first application being to a bank for a large amount consider starting small instead. Apply for a small limit on a store card and ensure you always make payments on time.
Keep Updated Records
Update your records with the major reporting bureaus such as Dun and Bradstreet, Experian and Equifax. Periodically apply for a copy of your credit report to ensure it’s up to date and has all the relevant history recorded on your profile.
Set Up Trade Lines With Suppliers
You will need at least three trade lines in order to obtain a Paydex score from Dun and Bradstreet. A Paydex score measures your payment history. Even smaller suppliers, like water suppliers or office stationary suppliers, can be valuable. While they may not report to the lending bureaus you can provide them as a reference when applying for funds.
Mind Your Credit
Once you’ve built up a good credit score use it and don’t abuse it. A good credit score doesn’t mean it’s time to go bananas applying for credit. Treat your credit score with respect as it can take years to improve.
Building business credit isn’t always a quick nor easy process, but it is worthwhile in the long run. With the practical tips suggested above your business can soon be on the way to improving its credit history.
What if I need funds before then?
At eBusiness Funding, we know that building business credit is a long-term process. This is especially true if you’re trying to restore credit after past issues. As a result, we offer funding services that can get you funding for your business quickly. Also, it is your potential that helps you qualify, not your credit history or collateral.
95% of businesses that meet our minimum requirements qualify. These requirements are very simple—all you need is to be in business for at least 6 months and bring in $10,000 in monthly revenue. We also can have your funds deposited in your bank account as soon as 72 hours after you apply.
Interested in working with us? Fill out the contact form on this page for essential funding support while you work on building your business’s credit.