How to Build Business Credit Fast: The 10 Best Ways

Business credit reflects an entity’s credibility as a borrower. The financial history of your company has a major bearing on your score. Factors such as your handling of business loans, credit cards, transactions with suppliers, and several other variables may impact your credibility.

Variables of Business Credit

Bureaus evaluate the performance of a business entity on the basis of a large number of factors associated with its financial aspects. Such considerations may be summarised as follows:

● Credit mix and re-payment history
● Demographic details such as vintage and size
● Information collected from creditors and vendors linked
● Public records
● Legal filings

On the basis of the above-mentioned factors, a score is worked out for every establishment. This score is numeric and reflects the creditworthiness of the entity. A high rating reflects a greater degree of trustworthiness of the organization in question.

Building Business Credit fast: 10 best ways

1. Getting your business registered:

This is an important tip to ensure that the entity has a standing of its own. This would also enable you to keep your personal accounts and credit score separate from your company. You may choose to get registered as a C Corporation, S Corporation, Limited liability partnership, or Limited Liability Company depending upon your choice and consultation with your accountant or attorney.

2. An Employer Identification number in place:

An Employer Identification Number or EIN is free and easy to apply. It is very significant for the credit history of your company. With EIN in place, you can easily apply for business loans and other products in the name of your company. Moreover, with good performance chances of building a strong business rating fast also stand to improve.

3. Separate banking account for biz needs:

To build your entity’s credit score fast it is a must that all financial inflows and outflows are separated from your personal transactions. A separate bank account for handling and tracking business-related particulars is an essential step to building up creditworthiness.

4. Establish contact details for your business:

It is of extreme importance to set up a dedicated address and phone number for your biz. These unique details may be essential for signing up in a few directory sites which are also referred to by bureaus.

5. Opening a credit file with a reputable agency:

Registering your business with prominent agencies and seeking a unique identification for your entity is a very important step toward establishing high scores.

6. Healthy relationships with suppliers or vendors:

A company operates well if a strong relationship is established with its creditors. These relationships usually extend LOCs for transactions and report these transactions to bureaus. Hence, repaying on time sends a strong signal and ultimately helps in strengthening your score.

7. Opt for different lines of credit for building up your rating:

Opting for LOCs and then repaying the loan amount on a timely basis is the most important tool for building up a score. You should opt for loans and credit cards and transact often to build a history quickly. In addition, repay these loans timely to build a healthy repayment history and win a worthy business rating.

8. Careful selection of lenders and borrowers:

Not all lenders report financial transactions to agencies. As a step to building up your rating fast, it is important to select lenders who report all transactions and help you strengthen your score. Opting for loans from reputed banks and other organizations or using credit cards for working capital requirements can prove to be beneficial for building up business credit fast.

9. Keep a constant check on the company’s rating:

It is a healthy practice to keep checking your score at regular frequencies to keep a tap on the accuracy and also to ensure no mistakes.

10. Be a responsible debtor:

Transactions should be tracked carefully and amounts borrowed should be re-paid timely and diligently. Making payments on time, going in for a good mix, and using limits judiciously are the rules of thumb for maintaining a high rating.

Significance of Business Credit

A company with a high credit rating enjoys a host of advantages because of being reliable, credible, and trustworthy.

● Better position to get financed for expansions and working capital requirements.
● An essential to pave the path for organizational growth.
● Indicator of stability of the company.
● Increases saleability.
● Reduce reliance on the proprietor’s personal credit
● Enhances ability to win favorable trade terms and conditions.