Archive for November, 2009

How To Establish Business Credit.

Establish Business Credit

When you first start a business, being able to get financing and business credit can be an added hassle that you weren’t anticipating.  Many people rely on their own personal credit in the beginning, but it is a good practice to try to separate the two entities as soon as possible and start establishing business credit so your business can function on it’s own.  This has the benefit of reducing personal liability and a possible negative impact on your credit report, as well as offer you increased lending opportunities.

Establishing business credit can be difficult, but it is an essential part of starting a business and with the proper steps you can be on your way to success.

1. Apply for an EIN number through the IRS.  An EIN is much like your social security number, only for your business.  It gives your business a unique number that is used for tax purposes and business credit reporting.
2. Register your business with the major credit bureaus.
3. Get you finances in order and create financial statements that you can present to suppliers and banks when you apply for accounts.
4. Start to make business transactions with companies who agree to report your payments.  This can be as simple as establishing utilities in your company’s name, opening accounts with suppliers or applying for a business loan.
5. Be sure to always make your payments on time and to check your business credit report to ensure that the companies you deal with are reporting your information to the major credit bureaus.
6. If a business is not reporting your payments to the credit bureaus, ask them to do so.

What Information Is Found In My Commercial Credit Report?

Business Credit Information

It is important to know what type of information is contained within your commercial credit report and how this type of information can effect your business.

Most of the information in a commercial credit report is usually reported by suppliers, utility companies and other businesses that report their accounts receivable information to the credit bureaus.

The following information may be found in you commercial credit report:

• Payment histories from the companies you do business with.
• Collection reports from companies that you may have been delinquent with on your bills.
• Public record information.  This can include business filings, property purchases, tax liens and other various information related to your business which is public record.
• Background information on your company.
• Information on how your company fairs within it’s industry.

Always be sure to check the information that is contained within your commercial credit report for accuracy.  If you find that any of the information in your business credit report is inaccurate, be sure to dispute it with the credit bureaus as this can have a negative effect on your credit score.

Why Does My Business Need A Credit Report?

Commercial Credit Report

Remember back in school when you had to give a class report?  It was a chance for you to earn a good grade and to show off your skills to your classmates.  Ok, maybe showing off too much might have earned you an unfavorable title among your peers, but in the business world, you want to get the best grade possible.

So why is it important for you to get a commercial credit report for your business?

Having good business credit is important to help you get the financing you need to start a business or to grow your business, but there are other benefits of having good business credit.

A commercial credit report can give you the information you need to know how your business stands among your peers.  This can effect many things, such as:

Business Loan Interest Rates.

With a favorable business credit score, banks are more inclined to give you better interest rates on your business loans or business lines of credit.  This saves you money over the long-term that can be reinvested into other key areas of your business.

Increase Your Vendor Pool.

With a good business credit score, you may be able to access more vendors who have tougher business credit requirements.  This can allow you to decrease your costs and expand your product offerings.

Increase Your Profit Margins.

With lower interest rates and the ability to shop around for the lowest priced vendors, your business will save money and increase your overall profit margins.

Have The Ability And Confidence To Grow Your Business.

With a good business credit rating, you have the ability to easily get financing for your business.  You don’t have to worry about what you will do if your business starts growing faster than you expected.  You can get the money to actively try to grow your business through advertising, marketing or new product launches.  You will have less stress and more opportunities, which means greater confidence and more advantages over your competitors.

Getting  commercial credit reports and business credit monitoring for your company is easy and rather inexpensive.  There are many companies who provide commercial credit reports, as well as the 3 major credit bureaus.  If you want to know your business credit score and be able to get the best grade and impress your business peers, than ordering a commercial credit report is essential.

5 Ways To Raise Your Business Credit Score.

5 Ways To Raise Your Business Credit Score

If you run a business than you know how hard the process can be.  One way to make running a business easier is to develop a strategy for raising your business credit score.  Having a better business credit rating can help you get lower interest rates on loans, expand the number of vendors who will be willing to do business with you and give your business more working capital in order to launch new products or to expand your business for growth.

1.  Order A Commercial Credit Report For Your Business.

Knowing is half the battle and if you’re going to raise your business credit score, you have to know what information is contained on your business credit report.  There are various companies that offer commercial credit reports and even credit monitoring services so you can always be aware of where your business stands.

2.  Separate Your Business Credit From Your Personal Credit.

Small business owners often make the mistake of intermingling their business finances with their personal finances.  You really need to make a concerted effort to separate these two as soon as possible.  Business credit reporting agencies want to know that your business is a separate entity that can stand on it’s own financially.

3.  Try To Deal With Vendors Who Report To Business Credit Agencies.

You may purchase through a vendor and think that, because you are spending lots of money and always pay your bill on time that your business credit score should be improving.  The truth is that only a small percent of vendors actually report to business credit agencies and you should always try to deal with vendors who do.  Ask your current vendors if they report your business transactions to the credit bureaus, and if not, ask them if they will start to do so.

4.  Build Your Credit By Applying For More Credit Accounts.

By no means do we want to encourage you to over-extend yourself, but if you have little to no credit accounts under your business name, then you really need to establish some in order to start raising your business credit score.  You could apply for business credit cards or a small business loan.

5.  Don’t Close Old Credit Accounts.

If you have past business credit accounts that you are no longer using, don’t be so quick to close them if they have been in good standing.  If you keep the accounts open, the positive reporting that you have accrued over the term of the business credit account will remain on your credit report, which can add a boost to your commercial credit report.