How to Boost Your Small Business Credit Score
Owning a small business is already hard enough, but building and maintaining good credit is sometimes even harder. If you haven’t already, chances are you will at some point need to borrow money to effectively launch or run your business, which comes down to having a good business credit rating. Unfortunately for many small business owners, building worthy business credit is not an easy or quick task. Not to mention, having a poor credit score can have a serious impact on your ability to secure a loan. Here are some tips on how to boost your small business credit rating to score that loan that you need.
Pay Your Bills on Time.
This may seem like a no-brainer to some, but this is the easiest way to get your business credit as high as it can be. The bulk of your business credit rating depends on how timely you are when it comes to paying the parties that you do business with. It's even better if you can pay early. Vendors are able to leave comments on your credit report, such as "pays early, pays late, etc."
Separate Business and Personal Accounts.
Separating your business and personal finances is key to maximizing your business credit rating. How you handle your personal finances should not interfere with your business credit. Having separate bank accounts and transactions for your personal and business accounts helps ensure that your business credit score won't be affected if something unexpected happens in your personal life.
Review Your Small Business Credit Reports.
Make sure to check your business credit report at least quarterly to determine if it is accurate. The last thing you want is for your business to suffer because of a poor judgement against your company or a mistake made by the bank.
Establish a Company Credit Card.
Getting a business credit card and using it for regular business expenses is one of the easiest and best ways to build business credit, as long as the balance is paid back every month. This is a great first step towards building up a history of prompt payments.
Create a Website.
This seems like an easy one, but having a business website impacts potential lenders. One of the first things a loan officer will do is to see what the company looks like by checking out their website. Having an attractive website gives the impression that your company is serious.
Write a Business Plan.
Most lenders will not give money to a company that does not have a complete business plan. This business plan provides a road map for your company, including your short-term and long-term goals. Be sure to add strengths and weaknesses and key points of differentiation.
Improving your business credit scores and ratings is one of the most important things you can do as a small business owner. Using these tips should boost your small business credit score to the rate it needs to be to receive the funding that you need in order to grow.
Disclaimer: The contents of this document are not intended to be, and are not, legal or tax advice. The applicable tax law is complex, the penalties for non-compliance are severe, and the applicable tax law of your state may differ from federal tax law. Therefore, you should consult your tax and legal advisers regarding your specific situation.