For a small and newly establish business setup, the hardest part of establishing business credit is simply getting your payment histories reported in the first place. If your business setup is going well, then suppliers will not report your payment history. If you denied a small business loan, it means you have a bad business credit. According to a recent research, there are Forty-five percent small business borrowers who get a “no” from creditors are turned down because of their credit scores.
Business lender companies and banks look at your business history and track record that either you are paying your accounts on time or not. Because many small business companies do not pay salaries to their employees on time. So it’s a difficult task to establish a business credit. Here are five steps to build your business credit.
Keep Your Information Current
There are many business lender companies that collect data and create business credit scores. As compared with personal credit scores, business credit scores are much less streamlined. Formula for calculating scores vary from state and state and business loan company to company.
You must maintain all vendors, creditors or potential customers. There are so many techniques that can help you in updating your business information will help you to keep your financial statements updated. So it’s a better thing that you keep your all business data information current.
Establish Trade Lines
If you buy any machinery from vendores, that purchase will help you to build your business line of credit. Some vendors also give you flexibility to pay for the inventors in several days. So in this way, your business line of credit will get a boost if your supplier will report your payments to your credit bureau. If you have no interaction with so many vendors, then you can trade with small vendors to boost your business line of credit.
Make Payments to Creditors Timely
Method of collecting data for business credit scores vary from bureau to bureau. All credit bureau look at your history of paying creditors. So if you want to boost your line of credit score, make sure that you are paying on time with no late and in this way, you can easily get a high score in a short time. A proper and positive credit history tends to weigh favourably. Credit utilization is also an important factor in credit scores. So use your cards and line of credits.
Borrow from different Lenders
To boost your business credit scores, borrow your inventory from different lenders and ask them to report your payments history to the credit bureau to increase your credit scores. Most of the banks also report to credit bureaus if you have a good payments history record.
Keep your Public Records Clean
To increase your business line of credit, you must keep your public records clean and updated. You business credit report will have any public records. If you have a bad records of your payment history, it will make a bad impression on your credit score.