How to Build Business Credit?

If you’re an entrepreneur, you would know the benefits of building business credit. Even if you don’t plan to take credit from lenders, it still makes sense to keep things flowing in the business. You may need finances to manage insurance premiums, purchasing equipment, managing office lease agreements, or building a rapport with your vendors. It also helps in influencing other companies in times of need or expansion. 

While building business credit may take time, you need to be patient in the first place. Secondly, you must take stern steps to ensure that you build credit sooner than expected to establish yourself as a reliable business entity. 

Today, we’ll discuss smart ways to build business credit. Let’s begin.

Establish your business

Credit reporting companies will create your business credit report based on your business existence. It's relevant for them to know that your business exists and doing well. When you’ve started a new venture and heading in the right direction, a good company credit score comes in handy. So, you should have your company’s information in order, such as your company’s address, contact details, industry information, and other documents, so that credit information bureaus can verify the information and prepare your business CIR accordingly. 

Establish trade lines

As an MSME, you would better understand the significance of establishing trade lines with your vendors and suppliers. It’s a two-way cycle as you’re dependent on them for material and services; thus, the payment terms should be clear right from the beginning. If you’ve extended credit to your vendor, you may want to record the activity and timeline so that it becomes easier for you to track everything in order. Establish lines of credit with your clients so that your payment history is impactful and it helps you build business credit, and your business CIR remains impressive. It’s always good to have a decent business credit score. 

Pay your dues on time

We understand that running a business enterprise is tough, especially if it is a small business. But you can always mend things at your end by following standard practices, including paying off your vendors on time. When you delay or miss payments, it not only impacts your credit information report, but you lose your vendor’s trust as well.

Now turning the table, there could be times when you had to lend funds to other businesses, and now you’re facing issues in getting your money back. In this case, the best solution is to approach a company like CreditQ that helps you settle payments with your debtors. Remember, your business CIR contains information about your payment and credit history. Moreover, your investors and creditors can access your credit information report and determine their interest in doing business with you.

Check your credit information report

Building credit does not necessarily mean managing your finances well. It also includes your financial habits, such as checking your business CIR regularly. It helps you examine and evaluate your business performance and report any errors and discrepancies that are impacting your credit report. This, in turn, can hamper your business credit score. While building credit, make sure you do things right like clearing off or reducing your debts and keeping a check on business purchases. 

While reviewing your business credit report, check for account information, public documents, tax liens, judgments, etc. Check if the information is updated. In case it’s obsolete, you can report it to your credit information company and correct it before time. 

Use this information to start building your business credit. You need to establish it as soon as you can so that it bears fruit for your business in the longer run.