Building your business credit score takes time and patience (two things we all need more of, right?), but there are some really great practices that you can implement right now so that you can strategically position your business to access affordable capital.
1. Register Your Business: Be sure your business is properly registered for legal and tax purposes with an Employer Identification Number (EIN). Once registered, the Company can associate lines of credit and other indebtness to the business. Thus building its business credit history.
2. Request a Business Credit Report: You can pull a report from Duns & Bradstreet and register for a D-U-N-S number. Be sure to review the report in detail as there are occasional errors in credit reports that can adversely affect your score. After you’ve gone over your credit report, you need to create a game plan to resolve each red flag. For example, if you have missed payments or disputes with creditors, resolve them first and then make sure each resolution appears in your record. If your credit card balances are regularly too high (eh…it happens) seek alternative financing so you can get those balances below 30% of your total line of credit. If there is a lien (uh oh, much more serious) then that lien needs to be expunged before you can secure funding from a bank. Traditional lenders will not loan to a client with liens. Period. In the case of bankruptcy, there is no quick solution (sorry). You just have to give it time and make regular payments to reestablish a good payment record.
3. Put Your Credit to the Test: Open a line of credit for your business with a bank, credit card, or an online lender. Be sure to start with a small line and stay current on all your payments. Also, avoid s overdrawing on your credit lines and maxing your credit availability month over month.
Using these tips together is one of the fastest ways to establish a strong business credit score. Now you’re moving forward.