There are several contributing factors working together to make a business successful. One very important factor is a good business credit history. You should have your credit history in mind from the start because it is the primary tool banks use to determine whether or not your business is trustworthy enough to give loans to. Did you know credit scores are also taken into consideration when businesses are looking to lease equipment? Learn more about why a good credit history is important and how to establish a strong credit score.
Think About the Future
More often than not business owners will only think about their credit score when it’s time to make a big purchase, such as buying or leasing equipment, conducting research or expanding the business. This is a mistake because one of the first things a bank will want to look at is a business’ credit history. You can’t afford to think about your score last minute because your credit report is the one chance you have to convince the bank that you are a responsible business that will be able to pay the loan back. Businesses with poor credit histories will have a much harder time convincing banks to trust them with a loan, so check your credit score regularly.
Make Finances More Manageable
In addition to getting your business the loan it needs, a good credit history will also help your business save money on interest. When your business is going through the credit check, a good credit history will help you get a lower interest rate on your loan. This is beneficial because paying a lower percentage for interest will help you save money in the long run and will make your loan payments improve your credit score even more.
How to Establish Good Credit
•Get a business credit card- Get a business credit card early and use it often. It doesn’t matter if your purchases are big or small; it matters if you are paying off your credit card.
•Keep tabs on your business’ credit history- You should be able to get a copy of your business’ credit report every year, so be sure to do this. Don’t just skim over the report; look through it carefully to make sure all of the information is accurate and up to date and be sure there are no mistakes.
•Get listed with the business credit bureaus- Dun & Bradstreet is one of the main credit bureaus and it runs its own business credit score by giving businesses a separate credit file number. This number, known as a D&B or DUNS number, rates your credit profile and determines your business’ credit worthiness.
•Learn more about credit scores and the lease approval process.
•Keep a good personal credit rating- When your company is small, new or doesn’t have a credit history creditors might look at the personal credit of the person who owns the business. Take care of your personal credit so it won’t hurt any business opportunities.
A good credit history isn’t something that happens overnight; it is something that business owners always need to keep in mind. A good credit history will open new windows and allow your business to flourish while a bad history will put limitations on your business’ options. Keep these ideas in mind so your business can take advantage of every opportunity that comes its way!
Labels: Business Tips