Building and maintaining a good business credit score is an important factor in securing needed small business loans. Good business credit also helps you obtain better interest rates on your loans and more favorable terms from suppliers. Additionally, potential clients may check your business credit score before committing to work with you. Here are some steps to take to enhance your business credit score.
Update Information With Credit Bureaus
Because you have no way of knowing which credit bureau your lenders, suppliers, and prospective clients might use to check your business credit score, it is important to keep your information updated at all three major bureaus. Experian, Equifax, and Dun & Bradstreet all have different data collection techniques and methods for calculating scores, so monitor your score and keep your basic business profile current on all of them.
Pay Creditors Promptly
All three major credit bureaus make your history of paying creditors an important factor in calculating your credit score. To optimize your score, always make payments not only on time, but early. Use the credit cards and lines of credit you have available regularly but moderately, up to no more than 30 percent of your credit limit.
Use Lenders and Suppliers That Report Your Payments
As long as you make all your payments on time or early, small business loans help build your credit score. However, not all lenders report payments to credit bureaus, so before you take out a loan, be sure that your lender reports. Additionally, if you work with suppliers that extend lines of trade credit, request that they report your payments to the major business credit bureaus.
Maintain Clean Public Records
Besides chronicling your payment history to lenders, suppliers, and other creditors, your business credit report contains any negative judgments on public record. These may include bankruptcies or liens on your property for unpaid taxes or loans. Keep your public records impeccable, as these bad marks remain on your report and continue to negatively impact your business credit score for years.
For more advice on business credit and business financing, contact Value Capital Funding.