DIY Corporate Credit Series: How to Establish Business Credit on Your Own
One of the most challenging issues companies deal with is how to establish business credit, also known as corporate credit. Many small businesses tend to wait until they “need” credit to build credit, which is a bad mistake. It takes established credit for a business to qualify for small business loans, real estate mortgages, even business lines of credit with higher limits. So, if you plan to use corporate credit to grow your company down the line, you need to start to establish business credit now.
The Basics of Corporate Credit
When you establish business credit, it’s very important that you keep it completely separate from your personal credit. Corporate credit is made up of multiple factors, including:
- Amount of time in business
- Size of company’s assets
- Payment history
You need to focus on each one of these various components in order to build your corporate credit. That means that once it’s established, you’ll need to make smart buying decisions related to business purchases made using credit cards, lines of credit, etc…
What Affects Your Ability to Establish Business Credit?
Your business credit score is positively affected as your company grows from year to year, as long as you operate responsibly. That’s because there will always be creditors you must pay each month:
- Credit card companies
- Government agencies
- Financial institutions
- Utility companies
- Vendors that keep your business afloat
Larger companies report the payment history of your business to Dun & Bradstreet, as well as other credit bureaus. When you make monthly payments on time, you’re establishing business credit that will continue to build each month. Potential creditors will be able to access your company’s credit history through these various credit bureaus.
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