How to Build Positive Business Credit
Establishing good business credit can be crucial for any business, especially a small business which is obliged to operate on a tight budget. Banks and other lending institutions will always consult your credit history whenever you apply for a loan, and it would be very beneficial for you to have a strong credit history to recommend you.
Establishing good business credit
The first step you should take is to incorporate your business, so that your personal and business finances can remain separate. Then you should obtain a federal tax identification number, which will always be required on any tax filing documents you fill out. Next, you should establish a bank account solely for your business, and make use of this account whenever you pay vendors or suppliers.
If you have also obtained a business credit card, make sure to do all your credit card payments using your business bank account. It’s also a really good idea to set up a business phone number, because that’s the number you’ll want to have listed in all directories, so that you can be reached by potential customers. You should also make a point of establishing a business credit file with all three of the major business reporting agencies. These three agencies are Equifax, Experian, and TransUnion, and it will be important for you to make them aware of your business and your good credit history.
Apply for a business credit card which can be used for smaller business purchases, and make sure that the credit card vendor routinely reports to the business credit reporting agencies. If possible, you should also establish a line of credit with your suppliers, to handle those times when you might be cash poor. Make sure these suppliers do report to the major business credit reporting agencies. Lastly, make sure to pay all your bills on time, so that you don’t have negative lines which appear on your credit history.
Do you need help with improving your business credit?
If you’ve been frequently obliged to make late payments to your suppliers because your cash flow is intermittent, we may be able to provide a solution. Contact us at DrawBridge Capital, so we can discuss some options for improving your cash flow.