By Estella Galan
Licensed Mortgage Advisor
NMLS 896325
Licensed in TX

If you’re a new business owner, you must open a business credit file for your company**. Even though you might understand how personal credit works, building solid business credit scores that can help your company thrive and grow is different. It takes time to build and maintain a good business credit report. Here are some things you should know about business scoring.

Pay on time — or in advance: It is very important  to remain current on all payments.

Keep your business and personal finances separate:  By maintaining separation, you can protect your personal credit profile should your company encounter financial difficulties.

Work with vendors that report payments to the business credit bureaus: Open accounts with companies who report your payment history to the credit reporting agencies and ask anyone who has extended credit to your business to report your payment history to the three major commercial credit bureaus.

Ask for terms: Vendor credit is a kind of short-term credit your company may receive from suppliers or service providers, allowing your company to buy now and pay later for the things it needs to stay in business. .

Don’t use too much credit:  The more credit you take on, the more debt you have. So, try not to use more than 30% of your credit limit consistently. It will demonstrate responsible borrowing and help build relationships with lenders.

Check on your scores regularly: You should always be aware of what’s in your business credit report and know your business credit score.

Fix errors on your business credit report: Errors won’t correct themselves so make sure that you pay attention to any old information and have it corrected.

When you put the time and effort necessary into establishing, building and maintaining a good business credit report and score, you’ll enhance your company’s business’ reputation and position it for success.

**Establish business credit: First,  you must file your business with your state by forming a corporation or LLC to operate your business. You should also obtain all necessary licenses to meet state and federal requirements for your business. And, establish accounts under your business name, such as a business checking account, utilities, leases and loans. Finally, find companies who will grant credit to your business without a personal guarantee. And while it is important to have one, don’t rely solely on small business credit cards for access to credit. Your business credit profile should be broader than that.