How to Build Business Credit and Take Your Venture to the Next Level?

You can secure the future of your business with a good business credit rating. It ensures your accounts are in good health and you can be trusted.  In short, it would reflect your status in the industry while qualifying you for loans and other forms of funding. It’s a great tool for building relationships in the market and is a major indicator of your business’s health and financial reliability. 

For any small business, having a strong credit rating can either make or break it; either it can fuel a life-changing project to its pinnacle or simply make you survive in the industry. There are even businesses that struggle to build a good credit score. So how to boost your credit score to stay in the business? Here are some key steps to improve your score.

Incorporate Your Business:

In most cases, sole traders and partnerships are attached to your personal credit scores. To start building your business credit score, you’ll need to incorporate it. By doing so, your business will be accepted as an individual legal identity and you can actually start building your credit. 

With all this, it will become easier for you to apply for business credit lines and funding under your business’s name. Even if the business fails under any circumstances, you won’t be personally liable for any losses.

Start Building Business Footprint:

This step involves creating a separate business bank account through which the majority of the transactions will be taking place. Make sure to keep your personal and business finances separate so that credit agencies can easily track your business, which will eventually impact your business credit score.

To have a legitimate identity for your enterprise, don’t forget to get your phone number and address listed in the directory. Try to be as professional as you can across different platforms. This is sure to boost your score. 

With a strong business footprint, you can avail of funding from private institutions as well, which offer easy and flexible funding solutions with repayment options tailored to your abilities. 

Get Your Employer Identification Number:

Just like social security number is required to file your personal taxes, an Employer Identification Number is mandatory for filing business taxes. Although it is not needed by sole traders and partnerships, having one anyhow can help you build your credit score.

EIN directly connects your business performance to your credit score and also ensures your personal finances do not interfere with your business finances.   

Register for DUNS number:

The Dun & Bradstreet number is a nine-digit code which is used for your business identification with the DUN & Bradstreet credit agency. It is one of the major credit bureaus operational in the US with a holding of over 200 million financial records on file.

Lenders usually use this agency to check the creditworthiness of the borrowers. If you are registered on this platform, it will add another layer of trustworthiness and legitimacy to your business profile. Also, you can check your credit score with them through paid memberships, which also includes tailored advice for further improvements. 

Apply for Business Credit Cards:

To build your business credit, using business credit cards is the fastest, easiest and cheapest solution. They are easy to procure, come with low borrowing limits, and are mostly easy to pay off. If you can meet your minimum repayments on time or can pay your full balance at a go, your business credit score will start to scale.

It is said that if you have more financial resources, your score will increase faster. However, it is necessary to pick the right credit card; one which reports to main credit agencies in order to have improved credit scores.  

Establish Lines of Credit:

Business lines of credit are very much similar to the business credit card concept. You will have a pre-set borrowing limit or options with no limit. This will allow you to draw as much money as you want and only pay the interest on what you borrow and nothing extra.

You can easily establish business lines of credit with multiple lenders or directly with trusted suppliers. Upon establishing a good relationship with them, you can ask them to start purchasing goods on credit. To build your score, request them to report your payments to credit bureaus. 

Track Your Credit Payments

Failing to keep track of your payments can adversely affect your credit score. So many on-time payments and consistency go into building a good credit score; missing one repayment can undo all of that. So, it’s highly important to not take on debts that you can’t repay.

Following the above tips and strategies are sure to help you build your credit score in the right way. All you need to do is to make a start, and things will eventually start giving you the desired results. You don’t need any complicated planning to boost your business credit score.