Considering this, it is essential that the small business owner separates their business and personal finances.
Fair Figure can be a great help in the fight to build better business credit. This online service helps business owners gain greater knowledge of their financial situation and offers help with budgeting, real time security alerts, fundability, and business scores.They provide easy to understand reports, scores and analysis - so you can simply and quickly see problem points.
We created this piece on business credit after talking to the team at Fair Figure, though all thoughts are ultimately my own
5 Simple Steps To Building Better Business Credit
One of the things to always remember is the higher your business credit score, the better your chances of obtaining better rates from various suppliers. Take a look at these simple ways of obtaining business credit and improving your business credit score.
Business Credit Agency Registration
The very first step you need to take as a business owner interested in credit is obtaining a D-U-N-S number. Once you have obtained this, you will want to begin the process of building a strong business credit profile. This means that everything you do as a business will be held separate from your personal finances.
In order to build a strong business profile, there are a number of steps to keep in practice. First, you always want to pay your invoices on time. One of the biggest things to affect a business credit profile is late payments. If you want to increase your score, you need to continuously pay all creditors in a timely manner.
It is wise to choose suppliers that share your payment history with business credit agencies. This is one of the most important aspects of choosing the right supplier as a small business. Far too many small businesses have incomplete credit reports because they are doing business with companies that are not sharing that vital payment information to the reporting agencies. This is one of the reasons why you want to build a good relationship with your suppliers.
If you are making all of your payments on time, you want to make sure those payments are being reported to the various reporting agencies. For one reason or another a good number of suppliers just do not make monthly reports and small businesses are missing out. When selecting a supplier to work with for the long term, be sure to ask them how often they make reports to the credit agencies. It is best to select a supplier who makes monthly reports as this is going to work best for you.
Use Caution With Credit
If you have yet to get a loan for your business, you are more than likely thinking about obtaining one. Once your business has become well-established and can no longer borrow, it is best to consider investing into the business and allowing it to grow. However, you never want to use all of the credit offered to your business either. This is known as the credit utilization ratio.
The less credit you use out what you have been offered is going to help give you a much higher credit score. When you use less credit, it shows that your business is stable and does not need to rely on credit. However, when you max out all cards, your company is going to be perceived as having issues with money.
Personal and Business Financial Separation
Finally, as we have already discussed, it is essential to keep your personal and business finances separate from one another to ensure they do not impact one another in a negative aspect. If you are unable to pay off some personal debts, you can rest easy knowing that your business accounts will be unaffected by this hardship
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