How To Build Your Business Credit Score
It’s common knowledge that a good credit score can have numerous benefits for an individual. The same is true when it comes to business. If you are building a small business, you should be mindful of building your business’ score as well. There are several steps that you can take to do this.
Know Your Score
In order to build your business’s credit score, it is best to start with this basic knowledge. There are three major business credit bureaus: Equifax, Experian and Dun & Bradstreet. For a fee, these bureaus will give you a copy of your credit report. It may be important to learn your own personal credit as well, since this can be a factor when you are applying for a loan, especially in the early years of growing a business.
If your business does not yet have any credit information, applying for a federal employer identification number, forming a limited liability company (LLC) or opening a business bank account are all good places to start.
Make Payments on Time (or Early)
Perhaps the easiest way to build your business credit score is simply to make timely payments. If you work with vendors, find out if they report your payments to the business credit bureaus. If they do, you’re all set; if they don’t, consider finding some that do, as it will help you improve your scores.
While it is obvious that making late payments will hurt your score, the best way to build your score may not be. Making your payments on time is good, but making your payments early is even better. This is the only way to get the best Dun & Bradstreet PAYDEX score, which is based on vendor payment history. Using a business credit card can help build your score as well and may offer other benefits to business owners.
Keep an Eye Out for Fraudulent Activity
Make sure that you regularly check your credit reports. By checking your reports every few months, you should be able to spot any fraudulent activity or errors that could affect your business score. If you find anything that seems wrong, be sure to report it, and try to get it resolved as soon as possible.
Building your business credit score is an important part of building your business. It may be a slow process, but it will pay off in the long run in the form of lower interest payments and insurance premiums.