What Is Business Credit and How Can You Track Your Score?
You’re probably very familiar with your personal credit score. Everything from receiving a credit card to buying a house can hinge on this important number. But do you have a business credit score? Despite what you might think, not all businesses have a credit score. Learn whether your business has a score or not and how to improve your credit score with these simple steps.
What Is a Business Credit Score?
Just like a personal credit score, your business credit score is used for a variety of financial decisions. From business loans and credit cards to refinancing options, your credit score is an important factor. Your credit score is determined based on a few factors, including how long you’ve been in business, your payment history and the amount of credit lines you’ve opened in the past. All of these factors together create a score that helps lenders and other businesses determine how trustworthy you are with your finances.
Increasing Your Business Score
The most important way to increase your business score is to create a business. This may seem obvious, but many small business owners, while self-employed, don’t have a legally separate identity. Whether you form a corporation or an LLC, having a separate business is the first step to creating a business credit score.
After you’ve created a business, you’ll need to prove your business is trustworthy. Do this by opening bank accounts, tapping into available lines of credit and taking out small business loans. By expanding your available credit and making prompt payments, you can start to generate a positive credit score for your business. If you’ve already made some mistakes and missed payments, you may have bad credit. It’s never too late to fix your low credit score. Simply follow these same steps and have patience.
Benefits of a High Credit Score
Once you’ve gained a competitive score, you’ll have access to a host of new financing options. Not only will more lenders be willing to work with you, you’ll typically enjoy better interest rates, higher credit limits and more flexible payment plans. A great credit score is the first step to expanding your business on the firm foundation of low-interest loans and a solid repayment plan. Whether you’re just getting started and need to create a business credit score, or your business is struggling and needs a boost, use these easy tips to boost your credit score today.