The Small Business Times

How To Build Business Credit Quickly

Business credit offers a means to evaluate the financial strength and credit worthiness of a company.

Strong business credit can help you access better terms when seeking business loans.

It also helps reduce business insurance costs and gets you more favorable terms from suppliers.

However, good business credit scores are not something you just get overnight.

Establishing and nurturing your business credit is a gradual process. The upside is that it doesn’t necessarily have to be complicated.

Effectively managing debts and ensuring punctual payments significantly contribute to this endeavor.

Nonetheless, there are specific actions you should take to enhance your business credit even during the initial phases when your business might not generate substantial income.

1. Leverage Tradelines

A tradeline is a record of activity for any type of credit extended to your business and reported to a credit reporting agency.

However, not all tradelines are the same so make sure to seek out superior tradelines review to find the right option.

Tradelines can set up a credit arrangement that can help establish business credit provided that you make payments on time.

Tradelines usually contain various data points related to the creditor, lender, and kind of credit on offer.

It indicates the type of credit provided, the paying party, and payment progress of the account. 

2. Open A Business Bank Account

Establishing a financial foundation for your business involves opening a dedicated business bank account.

When setting up this account, ensure it’s in the legal name of your business and use your Employer Identification Number for authentication.

This ensures that credit bureaus can track and register your on time bill payments as originating from your business.

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3. Create A Business Address And Phone Number

While it may seem like a simple step, getting a dedicated business phone number and address can solidify the existence of your business as a separate entity.

It is a small but important step when looking to build business credit as it allows you to register with business directories.

Most business directories require companies to have an address and phone number to sign up.

Credit bureaus often collect information from these directories and having the correct and consistent contact information listed on the directories could make a difference.

4. Get A Business Credit Card

One of the most common mistakes business owners make is using their personal credit card to pay for business expenses.

Credit companies work with credit bureaus and are key to building your business credit.

Yet, when obtaining a secured credit card, you’ll likely need to submit a deposit beforehand, a beneficial choice particularly for fledgling businesses with a limited credit history.

Regardless of your choice between a secured or unsecured business credit card, ensuring punctual payments each month can notably bolster your credit score without causing disruptions to your business operations.

5. Borrow From Lenders Who Report To Credit Bureaus

You have reason to be proud if you pay your loans and credit card balances on time.

However, you want to be sure that you get recognition for your good record and build business credit from your success.

You need to ensure that you work with lenders who will share your record with credit bureaus.

Ideally, they should report to at least one of the three main business credit bureaus.

However, this may not be a concern when dealing with other financial bodies since most conventional financing institutions and banks report your repayment history to a credit reporting bureau.

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Some online lenders, however, do not share this information. To ensure that you build business credit from paying a loan, make sure you check the policy of a lender before applying.

6. Report Previous On-Time Payments

You likely keep a record of timely payments you made in the past. These are key indicators of the creditworthiness and financial credibility of your business.

If you have a solid record of paying bills and suppliers on time, you can use various online services to report payments from a few years back to credit bureaus.

7. Monitor Your Credit Reports

There are three credit reporting agencies that monitor business credit files by collecting data from different sources.

They may have conflicting information about your business. Fortunately, they offer a means for updating fundamental details.

Should you encounter any inaccuracies or outdated information, it’s advisable to reach out to the agency or an auditing firm to facilitate the required adjustments.

Endnote

Establishing robust business credit is a process that unfolds gradually and cannot be accomplished overnight.

However, consistency and discipline will lead to improvements in a few months’ time.

These five tips are levers you can pull to improve your record with credit reporting agencies.