When owners form small businesses, it is crucial that they establish a separate business credit history and work on getting the company’s credit score as high as possible. This will make it easier for you to obtain loans at low interest rates and get better terms from suppliers and vendors. Here are some easy-to-implement steps that can help you accomplish this.
Keep Personal and Business Credit History Separate
Do not make the mistake of mixing your personal and business credit histories. Instead, keep your business finances completely separate from your personal finances in every way. If you do this, any financial difficulties you may be having personally will not negatively impact your business credit score.
Obtain a DUNS Number
DUNS stands for Data Universal Numbering System. A nine-digit DUNS number identifies your business for credit purposes. Registration for a DUNS number is free; you just need to fill out a few details concerning your business on an online application.
Select Suppliers That Report Payment Information
Make sure that the suppliers and vendors your company forms relationships with report your payment information to business credit agencies. Your prompt payments will help to raise your business credit score.
Make Payments on Time
Late payments to lenders, creditors, and suppliers will cause your business credit score to fall. To avoid this, always pay your invoices in a timely manner. If possible, make early payments, which will help increase your credit score.
Watch Your Credit Utilization Ratio
Your credit utilization ratio measures how much credit you are using in relation to how much credit you have available. It is not good for your credit score to use all of the credit you are offered. Instead, the less credit you use, the higher your score will be.
For more advice about establishing and building business credit, get in touch with Emerald Valley Financial Services.