How to Rebuild Your Business Credit Score
It seems like you just cannot get away from having a good credit score, whether in your personal life or in your business one. So, how do you build, rebuild and keep a good score for your company? First you will want to understand how business credit differs from personal credit as well as how to check what yours looks like. You can then determine the best ways to establish credit and rebuild it.
What Is Business Credit?
Your business will have its own credit history, report and score that is separate from yours, though it may reflect your personal score when you first start out. This information is compiled by three main credit bureaus, only two of which also handle personal credit information. You can contact Experian, Equifax or Dun and Bradstreet to determine what your company’s credit looks like.
Why Use a Business Credit Card?
Your business credit score is largely determined by the debts and payments that you have. When you have revolving lines of credit, such as a credit card, which are in good standing and do not account for a high percentage of total debt. This means that if you have one credit card for your business and keep the balance under thirty percent of the total available, it can help grow positive credit. You can also use small business loans for this effect, but having too many of one type of debt can reflect negatively on your score.
What Is Trade Credit?
Trade credit is when your vendors do not require payment upfront for goods or services. This is usually a relationship which is developed with your vendors, or even your customers, and requires a lot of consistency on your part. This can help you build up your credit score because it develops the reputation of your company, something taken into account for business credit history and scores. The best way to build trade credit is to work consistently with a given company to provide quality products and services to your customers.
Building or rebuilding your business credit score follows the same basic template as maintaining your personal score. You will want to have good working relationships with vendors and customers, establish credit through a credit card or other loans and keep your accounts in good standing. You can work with various credit bureaus to track your score as well as to find tips on how to further improve it or capitalize on it.