How To Build Business Credit Fast

Business CreditApproximately 45 percent of all small businesses who are turned down for a loan have bad credit to blame, according to the Federal Reserve Banks of Philadelphia, Cleveland, Atlanta and New York. A robust credit profile for your business doesn’t just make it easier to get a loan, it will also make it easier for your business to attract new customers. This is because, unlike with your personal credit report, anyone including potential suppliers, partners and customers can all see the credit report of your business at any time. With this fact in mind, it should be clear that if you own a small business, you will want to do everything in your power to improve its credit as quickly as possible and keep it clean as well.

Know your current score: While you are already familiar with Equifax and Experian when it comes to keeping tabs on your business credit score you are also going to need to familiarize yourself with the Dun & Bradstreet credit bureau. Unfortunately, while determining your personal credit score is relatively straightforward all three bureaus use a different means of determining business credit scores as well as asking various lenders for differing types of data. This will sometimes work to
your advantage, however as Dun & Bradstreet lets business owners update their basic business details and also upload financial data. Even better complete portfolios actually improving overall credit scores.

Set up trade lines: Assuming you purchase materials from third-party vendors, doing so in the right way can help you to improve your business’ credit. Assuming you have been working with a given vendor for some time, it is likely that they would be willing to extend you trade credit for the things you purchase most often. Trade credit simply means that you will be able to pay a predetermined number of weeks, or even just days, after you have received the latest shipment of inventory. Once you set up this type of relationship it is then easy to ask the supplier to report your
payments to the relevant credit bureaus.

You will want to try your hardest to establish at least three of these types of relationships as doing so will allow you to get what is known as a Paydex score through Dun & Bradstreet which is a measure of your successful payment history. Even if you form relationships with smaller vendors who don’t typically report details, by listing them on your account as trade references the bureau will then follow up with them to generate your score.

Be prompt with payments: Just like with your personal finances, paying creditors on time is a crucial part of building your business credit successfully. If you are looking to get the best Paydex score from Dun & Bradstreet you are going to need to go above and beyond and make all your payments early, no exceptions. Additionally, the longer your credit history the better so the sooner you can start forming these relationships the better it will be for your score.

Borrow from the right lenders: While having a loan and paying it on time can help to boost your business’ credit score, this will only be the case if the lender you choose reports to the bureaus which is far from guaranteed. Do your homework and make sure that your fiscal responsibility is helping you out as much as possible when you do get a loan. Most banks will report to the bureaus as do the online lenders including BlueVine, Kabbage, Funding Circle Fundation, Lending Club and OnDeck. Fundbox, Lighter Captial, SmarBiz and most merchant cash advance companies do not. If you are using business credit cards (see Money Crashers Small Business Credit Card recommendations) strive to keep your credit utilization under 20 percent for the best results.

Be aware of your public records: Just like your business credit report, your public records can also be seen by anyone which means you are going to want to do your best to stay on the right side the law. Not only will negative public records affect your business credit score, they will affect the way the public perceives your business as well.

Steven Millstein
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