Every business with an Employer Identification Number, or EIN, from the IRS has a distinct credit score apart from the personal credit scores of its owners. These scores become particularly important when you require a loan from banks or other traditional lenders. As part of the approval process, these lenders closely scrutinize your company’s credit report.
Taking these five steps will help you build up your business credit score.
Make Timely Bill Payments
Paying your bills on time is an integral factor in building a strong business credit score. Late payment of bills not only causes your credit score to plummet, but also creates interest and penalty fees that add to company debt.
Reduce Outstanding Credit Balances
Owing money on credit accounts causes your business credit score to drop. Work on paying off these debts to strengthen your credit rating. Start by eliminating debt on the accounts charging the highest interest rates while keeping up with minimum payments on the others. Keep at it until you’ve got them all paid off.
Establish Credit With Suppliers
Use vendors that report payment information to the main business credit bureaus. Making payments to these vendors on time will strengthen your business credit score.
Communicate With Creditors
Occasionally as a business owner you encounter unexpected financial emergencies despite your best efforts to stay on top of things. When you find it difficult to handle all your bill payments, communicate with your vendors and other creditors directly. Attempt to work out payment plans that preclude the necessity of disclosing your late payments to the credit reporting bureaus.
Monitor Your Credit Report
Sometimes inaccuracies and errors may appear on your business credit report through no fault of your own. To prevent these mistakes from negatively impacting your credit score, periodically check your credit reports at the three main bureaus. If you find any discrepancies, report the problems to the credit bureaus immediately.
For more advice on building your business credit score, contact Mossberg Strategic Capital.