Building and maintaining a strong credit profile for your small business can help you get access to funding, therefore important resources. Just like personal credit, your business credit rating is affected by a number of different factors. Understanding these factors and taking the time to monitor and build your credit can help your business grow.

Making Your Business Legitimate

  • One of the key components of good business credit is your business structure. If you’ve been working as a sole proprietor or are missing a few key important pieces of paperwork, you need to take steps to appear more “real” and stable. Check to be sure that you have the occupational licenses that you need. Get your phone number listed with directory assistance under your businesses name. This is also a good time to incorporate if you haven’t yet already.
  • Another part of increasing the legitimacy of your business is creating a business plan. If you’re applying for a business loan or other type of financing, you’ll need to show a complete business plan including the necessary financial details.

Start Building Your Credit Profile

  • Once you’ve established your business’s legitimacy you need to begin making purchases under your businesses name. You’ll either need to invest your own money or have other individuals invest money on your behalf. You need to use this money to make purchases from vendors who will help you establish credit based on your personal credit, and who will report your transactions with them to the credit reporting agencies.
  • If purchasing from vendors isn’t an option, you can also get your credit started with a loan from the Small Business Administration or another state or national business association. If you do borrow money, be sure to make payments on time in order to create a good track record with credit bureaus.

Start Building Your Credit Profile

  • In addition to borrowing from a lender and purchasing from reputable vendors, there are several other strategies you can use to help build up your business credit.
  • Limit the number of inquiries on your credit profile – Only apply for a select number of loans or credit cards. Don’t over apply.
  • Keep your licenses and registrations up to date – Stay on top of renewals and any new licenses that may be necessary to keep your business operating.
  • Maintain your financial records – Keeping up to date records and making sure that your finances are in order can contribute to a better credit score.
  • Review your credit rating regularly – Dun & Bradstreet and Experian both produce credit reports for businesses. Review them once every six months and contact the bureaus if you notice any errors.

As you’re building your credit watch out for business credit scams and schemes. Some companies may offer to sell good business credit ratings. Credit reporting agencies are aware of these companies and will typically get rid of the references.

With great planning and due diligence you can create a strong business credit profile so you can get the funds you need to grow your business.

Courtney Ramirez
Research Analyst, Pacific Business Centers (rebranded as Pacific Workplaces)

Courtney’s research for Pacific Business Centers focuses on tracking emerging business trends and best practices – with an emphasis on how they affect business operations, technology, and the future of work trends.