Discover 5 Easy Ways To Get Business Credit

First Steps to Establishing a Creditworthy Business

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Many small business owners use their personal credit for their own business. This is attributed to the fact that many creditors, lenders, and suppliers will obviously cross check your credit history whenever the business applies for a loan or any other type of credit.

Therefore, as a small business owner, it is essential to separate the business from you and treat it as a separate entity. First, obtain a Federal Tax ID and select the entity structure of your business.

The company's ID Number will be used to register with the business credit reporting agencies such as Dun & Bradstreet. Establishing a business credit report for your company has different benefits, such as getting low interest rates on loans and positioning your company to get favorable payment terms from suppliers.

Remember the higher the business credit score, the better the chances to qualify for better payment terms from suppliers. Below is a look at easy ways to get business credit and improve your business credit score.

1. Get Registered with the Business Credit Agencies

One of the first steps is to apply for a D-U-N-S Number. After doing so, go on to build a business credit profile, which is separate from your personal credit report, by acquiring credit from suppliers and vendors.

2. Pay The Invoices Owed on Time

One thing which affects business credit is late payments. So as to increase your credit score, it is always advisable to pay all your creditors, lenders and suppliers on a timely basis without fail.

It is also good to note that your company's credit report will reflect that your business pays better than terms.

3. Choose a Supplier Who Shares Payment Data to a Business Credit Agency

This is also another major area of concern you should pay attention to when it comes to your choice of supplier. Many small businesses suffer from incomplete credit reports since many creditors or suppliers do not report the payments made to the business credit agencies.

Thus, if you know your business makes all the payments on time, it is really advisable to pressure them to report all the payments to different business credit agencies. This is due to the fact that many suppliers do not report payments made to them by businesses. Therefore, choose a supplier or lender who reports all the payments you make to them in order to raise your business credit score.

4. Avoid Using Too Much Credit

After your business is well established and can no longer rely on borrowing, it is good to invest back into the business instead of taking loans on credit. On the other hand, it is good also not to use all the credit given to you by creditors. This is called credit utilization ratio. The less the credit you use out of the total credit given to you, the higher your credit score becomes. Using less credit shows that your business is stable financially and does not depend on credit. By being overextended and maxed out on credit, your company is perceived as cash-strapped.

5. Separate Your Personal History from Business Credit History

Lastly, we would highly recommend that you separate personal credit from that of the business in every aspect of your operation in order to minimize the impact they have on each other.

For example, if you are going through a financial hardship personally, it should not interfere with your business credit report.