Having a strong business credit rating opens up doors for entrepreneurs; financing is easier to secure at better terms and lower rates; lines of credit are extended from vendors and suppliers; and businesses can spread out the cost of certain things, rather than having to bear the burden of a large upfront cost. Many people know the result of strong business credit, but very few know how to get there. We have compiled a list of three best practices every business owner can use to build strong business credit.
1.) Pay Off Your Bills
It almost seems like a given that paying off bills will help to boost credit ratings, but most people wait until the end of an aging period on an invoice before they remit payment. The truth is that paying off bills well ahead of that date has a more significant effect than waiting until the last minute, especially if that information is submitted to a business credit agency.
2.) Research Your Vendors
Speaking of business credit agencies, not all vendors and suppliers report their information. This means that you could pay off your invoices ahead of schedule, and not see your business credit score change at all. It pays to work with vendors that report their information to credit reporting agencies. If they report their information, and your business pays its bills responsibly, then the score should increase significantly over time. If you vendors do not report their information, then it might be time to shop around for new suppliers.
3.) Review Your Business Credit Report
Most entrepreneurs only ever check their business credit reports when seeking financing or traditional bank loans. However, it is wise to review the credit report on a regular basis to see the current credit score, what could be improved, or if there are any anomalies that should be challenged or removed. Remember, any incurred debt, paid off accounts, and similar things will normally cause a company’s credit rating to change, and will be reflected in the the following month’s detailed credit report. Credit agencies are very large organizations, and there are occasionally errors or things left to linger on reports which should have been removed a while back. These oversights should be challenged to rectify an inaccurate score. Keeping on top of these things is how businesses build strong business credit ratings and get access to all the benefits of increased credit scores.