About Lesson
1. Separate Business And Personal Credit Reports
Separate the business and personal credit reports of the owner. First, form a legal entity, corporation or LLC. Second, apply for credit in the business name with companies that report to the business credit bureaus. Third, use some of the credit and pay your bills on time to build your business credit score. Focus on building the business credit score with the business credit bureaus.
2. Pay In Full
Make sure you have at least one credit card that you always pay in full at the end of the month. You may have other cards that carry balances, but that one card that’s always back at a zero balance at the end of the month does wonders for your credit score.
3. Monitor Your Business Credit
Unlike personal credit reports, you can’t get free access to your full business credit reports. But, a couple of apps do provide free business credit alerts. Experian or Dun & Bradstreet offer solutions. Use one of these to stay on top of where you stand and get notified of any changes.
4. Get Credit Early
Most small businesses don’t have access to credit in their early days. When it finally comes time to obtain a line of credit, many can find it challenging. While banks may be reluctant to extend large lines of credit to new businesses, it should be part of every company’s quarterly accounting to re-apply regularly. When credit is finally extended, you may not need to use it, but this will provide vital information to improve your credit score in the future.
5. Use Credit Consistently, Pay On Time
Similarly to personal credit, business credit is predicated on three areas: paying bills on time, credit utilization ratios and consistently utilizing credit over time. The easiest step a business can take is to open up business credit lines as soon as possible, use that credit, and ensure that all payments are made as early as possible — this will help your credit scores jump in a fairly short time frame.
6. Make Payments Earlier
I use my company credit card for most small items. It’s easier, but rather than wait until the last minute to pay, I look at when my credit score is usually pulled and make sure that I’ve paid my credit card accounts prior to that date. By keeping a close eye on that, I make sure that my credit utilization is low, and that helps keep my credit score high.