Credit is a useful thing for business to have. Down the road, you may want to rent new office space, expand your inventory or open up a new branch. For most businesses, though, taking any of those steps will require a loan, which is very hard to get without credit. But, just as you have to build up your personal credit, you have to build up your business’ ability to borrow money. It’s much easier to build up credit before you actually need it: whether or not you’re planning to expand your business any time soon, it’s worthwhile to start working on your business’ credit history now.
Businesses and Credit
Building up a business’ credit can take a little more effort than improving a personal credit score. After all, you’ve been building a credit history for years. If your business is relatively new, however, there just hasn’t been time for much to make it on to the company’s credit history. Worse, building a credit history from scratch can be tough.
You may have been paying money out from your business’ accounts, but that does not mean that you’ve built up a credit history. Unfortunately, many vendors and service providers don’t report to the credit bureaus that track business’ credit.
An important starting point can be putting bills in the business’ name. When you first rented space, turned on utilities and started paying monthly bills for your business, you may or may not have put any of those bills in your business’ name. It’s worth going down the list of bills associated with running your business and make sure each one is in the company’s name, if only to make sure that your business has a track record of paying bills on time. Utility companies are among the most likely to routinely make reports to credit agencies.
Credit Cards Make Sense
It’s also worthwhile to open a credit card in your business’ name. You may not be able to get a particularly large line of credit, at least at first. But you can improve your chances by going through the bank where you have your business’ accounts. Some stores will also offer business credit card accounts.
Once you have a credit card for your business, it’s important to use it. You can make using it a simple process, without running the risk of carrying a lengthy balance. Just set up one regular bill to go to that card — such as a monthly website hosting bill, a utility bill or something else that reoccurs regularly. A bill for a consistent amount is the best option. From there, you can set up an automatic payment from your bank account to cover your credit card bill. It may make the paperwork a little harder, but it will establish your credit history as well.
Getting the Best Credit
Unfortunately, building up a great credit score for a business is harder than for an individual. The best credit scores are reserved for big companies and, if you’re smaller, you just can’t get there. However, due to that fact, the Small Business Administration can help you find loans specifically meant for small businesses, as long as your credit history stacks up against business of the same size.
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