Just like your personal credit score influences your chances of getting a car loan, your business credit score can have an impact on your ability to get financing, negotiate with your suppliers, and more. Your business credit file should be established early – preferably as soon as you start your business – to help you build credit history, an important piece of your score.
Business credit is reported to three agencies: Equifax, Experian, and Dun & Bradstreet. Each agency receives data from different sources, so your score could vary greatly from one report to another. While banks are required to submit financial activity for your personal credit score, it’s optional for suppliers to submit data to business credit agencies. The Small Business Administration recommends that you monitor your report on a regular basis to remove inaccuracies, just like you would with personal credit.
The Benefits of Good Business Credit
Having good business credit can help your business increase working capital options and decrease expenses. Since businesses take a significant amount of capital to run, if you’re using personal accounts your credit utilization could quickly become overextended, impacting your ability to borrow for your family. Furthermore, consumer reports track the number of credit inquiries you make, which can lower your score. On the other hand, business credit inquiries do not impact your business credit score. Business credit reports do not count financing inquiries against you since obtaining financing can be seen as a positive way to grow your business.
Businesses with good credit scores are seen as financially stable and lower risk. The higher your business credit score, the more financing options you could qualify for. You could also be able to negotiate lower space or equipment leasing rates and insurance premiums, saving your business money over time.
Suppliers or investors who pull your business credit report will be able to see the financial stability of your company, which makes them feel more secure about doing business with you. You can also leverage your high credit score to negotiate better payment terms with suppliers, allowing you to keep more cash in your account.
How The Business Backer Can Help Your Credit
The Business Backer takes a unique, blended view of personal and business credit to provide funding approvals. For smaller, younger businesses that are still working to establish and grow their business credit, we increase the weighting of the owner’s personal credit score. As these businesses grow and age, we weight the business credit score more heavily since there are established credit trends.
The Business Backer cares about helping small businesses thrive. A key element in doing this is helping customers gain access to traditional financing options. To do this, we provide information about your successful financing payment history to Equifax and Experian to help build your credit.
What are some other ways to build your credit? Check out our blog on 5 Ways to Boost Your Business Credit Score.