The money you borrow and the way in which you repay it is all tracked on your business credit report. Your business credit is essential to your business as it provides you with a chance to acquire funding from lenders in the future and it also provides you with a stronger financial outlook. Like your personal credit report, your business credit report must be looked at often in order to ensure that you are making the right type of decisions and that your credit rating is correct.
Making the wrong decision can completely ruin your small business and your credit rating. If you fail to generate the profits you need to sustain your cash flow and provide you with enough money to pay back the money you borrow, you pose a risk to your business credit report as lenders will see you as a high risk investment.
What type of information is included on the business credit report?
You need to order a copy of your credit report to make sure all the information on the report is accurate. It should include the following information:
Your business credit report can prevent you from having lenders research your personal credit to find out what type of payment behavior you have. As you start to establish your business credit, you will set yourself apart as a legal and legitimate business. During the first few months of operation, you often need to rely on your personal credit to help you acquire funding for the business. After you demonstrate financial control an worthiness, you will be able to rely only on your business credit and you can finally keep your personal assets safe.
With business credit, you often build it by using a business credit card. If you are given the credit card line from another business, this is usually known as trade credit. Trade credit information is gathered by the credit bureau and it generates your business credit report.
There are 4 different credit bureaus that provide you with information about your credit report. Dun & Bradstreet remains one of the most popular credit bureaus for business credit reports but the information is also reported to Experian, Equifax, and Business Credit USA.
The frustrating thing with business credit reports is that your vendors are not required to report it. So if you have a line of credit and you are controlling it correctly, future lenders may never know about it because your other lenders aren't reporting it. If you are focusing on building your credit rating, you need to find the lenders that are actually reporting information to their credit bureaus. Checking your business credit report is the only way to make sure your lenders are actually reporting information to the credit bureaus in a timely manner.
Unlike your personal credit rating, your business credit rating only goes up to 100. A solid business has a credit rating of at least 75 in order for lenders to work with them. To develop the right type of business credit you need to make sure you have formed a legal and legitimate business entity. File for your FIN or EIN from the IRS and then you also need to make sure you file the right business entity which can be an LLC or Corporation. Upon filing for all of the legal paperwork for your business, you then need to make sure you register your business with the credit bureaus.
Corporate Credit Concepts specializes in business credit report. For more information about business credit report how it might benefit your business, please CLICK HERE for a free phone consultation.