How to Build and Improve Your Business Credit Score

As a business owner, it’s essential to have a strong business credit score to secure financing, obtain better terms on loans and leases, and establish credibility with suppliers and partners. Building your business credit score takes time and effort, but the benefits are well worth it. In this article, we’ll discuss some practical steps you can take to build and improve your business credit score.

1. Establish Your Business as a Separate Entity To build your business credit score, you need to establish your business as a separate legal entity. This means incorporating your business, getting a federal tax ID number, and opening separate business bank accounts. By doing this, you’ll be able to separate your personal and business finances, making it easier to track your business’s financial health and build a strong credit history.
   
   
2. Open Trade Accounts with Vendors and Suppliers Once you have established your business, you can begin to build your credit history by opening trade accounts with vendors and suppliers. Trade accounts allow you to purchase goods or services on credit and pay them back at a later date. Be sure to choose vendors and suppliers that report your payment history to the major credit bureaus. Consistently paying your bills on time and in full will help establish a positive credit history.
   
   
3. Apply for a Business Credit Card A business credit card can help you build your credit score by establishing a payment history and showing lenders that you can manage credit responsibly. Be sure to choose a business credit card that reports to the credit bureaus and use it regularly, making sure to pay the balance in full each month.
   
   
4. Monitor Your Credit Reports Regularly monitoring your credit reports will help you catch any errors or discrepancies that may negatively impact your credit score. You are entitled to one free credit report per year from each of the major credit bureaus. Review your credit reports and dispute any errors or inaccuracies promptly.
   
   
5. Maintain a Strong Financial Profile Your business credit score is affected by many factors, including your payment history, outstanding debts, length of credit history, and credit utilization. To maintain a strong financial profile, be sure to pay your bills on time, keep your credit utilization low, and avoid taking on too much debt.