Having good business credit puts you in a position to finance everything you need to run your business. Large or small purchases are made and you don’t have to worry about spending a chunk of money when an emergency happens. Getting to that point is the hardest part, but when you follow a few simple rules, you quickly establish good credit that gets your expenses paid for.
1.) Separate your business credit from your personal credit.
If you’ve been using your personal credit to pay for business expenses, it’s time to separate the two. Opening up a business bank account ensures that you don’t mix funds and establishes a history of statements specific to your business. You should even use this account to pay yourself by depositing into your personal account from your business account. Lenders are more concerned about this account than your personal one, so this is the first step in creating a good financial history for your company.
2.) Check your credit scores.
You have to know where you currently stand in order to move forward with your business credit. You should check your D-U-N-S number once you’re legally established as a business. The score they provide is frequently used in trade credit application checks. If you don’t have a file on record, registering so you can keep up with your score is advisable. There are also the more commonly known credit bureaus Experian and Equifax. Even though you don’t have to register for those two, the information is still valuable. Knowing your score and getting a report shows you your financial status and exactly what lenders see.
3.) Take advantage of vendor supplied credit.
Places you go every day or week to stock up on supplies can offer you a line of credit. They want to keep you as a customer and you want to use them to build your credit score. Make sure they send your credit history to the business credit bureaus; otherwise, you won’t get the financial history you need to move on to the next step.
4.) Open up a business credit card.
The most obvious business credit step is to open a business credit card. Similar to the objective of opening a business bank account, this card is not tied to your personal credit card that you may have been using for your business expenses. This is an important step in establishing a credit history that is to follow your business for the rest of its existence. Just make sure you make your payments on time or even early each month. Potential lenders look favorably upon businesses that pay early, and your score