Small business owners have to stay on top of both their personal credit and their business’s credit if they want to stay afloat in all economic climates. Thankfully, this is easy enough to do as long as you know where to begin.
1. Create a Business Credit File
If you’re just starting out, you’ll want to create a business credit file with Dunn & Bradstreet. First, you’ll need to apply for a D-U-N-S number, which is a unique number that will be associated with your business. If you go to the D&B website and find that one already exists, review all information they have on file for you and verify that everything is correct. Make sure they have the right financial institutions, vendors, and suppliers linked to your account. If they don’t, things could get complicated for you in the future.
2. Create a Business Account With a Bank
Put all bills in your business’ name and pay those bills with working capital from your business bank account. This makes things simpler because it separates your business and personal finances, which contribute to two separate credit scores. Plus, part of your business credit is scored by the age of account. The longer it’s been open, the better.
3. Pay All Bills On Time
In the beginning, your business’s sole credit history will be from its payment history. In the day-to-day grind, it’s easy to get behind on the little things. But it’s the little things, such as bills, that will later help determine your business’s creditworthiness.
4. Routinely Monitor Your Credit File and Keep Everything Up to Date
If you monitor your credit file, you’ll be aware of any drops or increases in your business’s credit score. Owners who are aware of any dips in their ratings are obviously more likely to rectify any negative entries than those who aren’t. It’s also important to keep the credit file up to date because your business’s rating is impacted by a variety of different factors, such as revenue, number of employees, and location. So, if you’re able to hire more people because business is going well, make sure your credit file reflects this. This kind of information always strengthens a business’s credit rating.
If you create a credit history as fast as you can, you’ll be able to focus more on the big-picture items and less on the small details. It just takes a bit of groundwork and a little maintenance.