Everyone knows that a good credit score is important for everything from financing a new home to buying a new smart phone. However, many people don’t realize that good credit is important for businesses, too. Businesses often run on credit. If you’ve got a poor credit score, that will affect your ability to get loans and in turn, do business. If you’re in a tough spot and need a business loan, you can visit Yellowstone Capital online. It’s also a good idea to work on improving your business credit score. How?
Business Credit Basics
First, it’s a good idea to know just how business credit scores work – especially because they are different than personal credit scores. Different credit reporting agencies use different scales, but most business credit scores work on a scale from 0-100, with 75 or higher considered a good rating. It’s extremely important to monitor your business’ credit rating in order to know where you stand with potential lenders and business partners. Analyzing your business credit report is also a great way to see both what you’re doing right as well as what negative factors are affecting your score.
Whatever your score may be, following these tips is sure to raise it:
- Keep your business finances separate from your personal ones. This even goes as far as avoiding registering as a sole proprietor if at all possible. When you register as a sole proprietor, sometimes your personal finances are factored in by a potential lender when you apply for credit. To keep this from happening, register your business as a corporation or a limited liability company and obtain a separate tax number.
- Additionally, never use personal credit cards for business purchases. Keeping your business and personal expenses separate will help improve your image both with creditors and with the IRS.
- Pay on time and make sure it’s reported. Not only is paying your bills on time important, making sure your creditors report that you do so is important as well. This will help you build a positive credit history and thus raise your credit score.
- Set goals and be patient. Experian recommends deciding what credit score you want and then writing it down. This will give you something to strive for and will be a physical reminder of your goal. Once you’ve done this, be patient. Building a good credit history takes time and perseverance.