Your business has a unique credit profile just like everyone has a personal credit profile. And, like your personal credit score, it impacts your ability to qualify for a small business loan and whether or not other businesses will sell, lend, lease, or partner with your company on credit. Similar to your personal credit, a strong business credit profile can help you get lower interest rates, better financial terms (on insurance, for example), and even qualify for a larger line of credit. Here are five ways to improve your business credit profile:
1. Pay on time. From your phone bill, to your suppliers, to any loans and leases, make payments on time to avoid negative reports to the credit agencies. Dun & Bradstreet, the largest of the business credit reporting agencies, says this is “the most direct way to drive a positive credit rating.”
2. Make sure the credit agencies have accurate information. The websites of the major business credit agencies—Dun & Bradstreet, Experian, and Equifax (though there are others)—will allow you to check your profile. Make sure the information is accurate, especially if you’ve moved or have made other recent changes. It’s not always easy to have changes made, but they are very motivated to make sure their information is accurate.
3. Play up the positive. Make sure your lenders and suppliers report the good experiences they have with you, because it’s possible that not all of your vendors report your credit history to the bureaus. Also, make sure to look for partners who report their trade information. Then check your credit profile to make sure these positive experiences are there. Dun & Bradstreet will let you add positive trade references to your profile, for a fee.
4. Keep your debt manageable. If your business is carrying a lot of debt, it may make potential lenders see you as a greater risk. Take a look at other businesses in your industry to see how your financial indicators stack up.
5. Don’t forget your personal credit. It’s a good idea to separate your personal and business credit as soon as possible. For small business owners, lenders will always look at your personal credit. Keep your personal credit report in top shape by following some of the same advice as above, including regular checks and paying your bills on time.
Lastly, there’s one easy way to maintain a high credit score: keep your payment history consistent and clean. If you’re constantly making late payments, you’ll see your credit score dip dramatically as a result — even if you’ve always made the payments eventually. Keep an eye on due dates, and make sure that none of them pass without you making the necessary payment.