Top 10 Tips by Midwest Corporate Credit Review to Build a Strong Business Credit
Any business, small or big, needs financing quite regularly as the owner wants to expand, upgrade or even move, pay employees or sponsor them for an advanced course, arrange conferences or sponsored programs, advertise and conduct many more such activities. At such times, if you are rejected for financing, the situation becomes very difficult, putting you under tremendous stress. Don’t think you are alone, as all those who have big dreams face such situations; it’s smart to find a solution to this and the best solution is to build a strong business credit!
Your personal credit may be spotlessly clean; but have you checked if your business credit is that clean? If you are getting repeated denials for business financing, you need to check your business credit. You will surely feel the need of improving it.
Check your business credit report keenly to find if there is any factor that can be a red flag for the lenders, for example mismatching business data. Clear up errors if there are any and start establishing your business credit profile and you will start accessing capital that will make you running and growing your business way easier with organizations like Midwest Corporate Credit who are famous for a hassle-free, easy application and approval process. You can easily manage cash flow and you will be able to capitalize actually on growth opportunities.
There are certain ways to build business credit just the right way. Some of them might have been already tried by you, but there’s no harm in checking if you have tried them all. Here they are
1.Make Your Business Well-known
The first thing required for building your business credit is to make your business well-known. If you haven’t done it so far, you will have to establish your business as an individual legal unit with your state. It means either you should incorporate or set up an S-Corp or LLC. Discuss with your tax advisor about which option is the best suitable to your situation. Further, you will have to apply for EIN (Employee Identification Number) through IRS.
2. Start a Business Account with a Bank
For keeping your personal and business financial matters clearly separate, starting a business account in your bank is a most important step. With this account, you can look after all your business expenses (this should also include paying yourself). In case if you want to apply for business finance, your business account data will be one of the first things that lenders would want to check as it will help them make a decision.
3. Get Your Business a Dedicated Phone
A cell phone number, landline number or VoIP, whatever you may choose, there should be a separate number only for your business. Also make sure that the number you choose only for your business is listed, so that it can be found.
4. Check if You have a D-U-N-S Number
After you have done everything to establish your business legally, next you must ensure whether it is listed with Dun & Bradstreet. This is one of the chief credit bureaus and many lenders rely upon its PAYDEX score for business credit applications. You can get D-U-N-S number for free if you haven’t one yet.
5. Equifax and Experian
These are the other two main credit bureaus which lenders consider for data while making lending decisions. However, you can’t register manually with these two bureaus, unlike D&B, to build your profile. They do it on their own by getting your details from public records and the information sent by your lenders and creditors.
6. Take Benefit of Credit of Renowned Suppliers and Vendors
By now, you may have built relationships with some suppliers and vendors that have built their own credit. Some names may be UPS, Office Depot, Home Depot, FedEx, Staples etc. Request them to pass on a small amount of credit to you. As they too need you as a customer, most of them will agree to this. Only make sure that they send your payment history to the credit bureaus. Ideally, you can establish 4-5 these kinds of accounts that will help you fill your credit profile.
7. Get a Business Credit Card
Stop using your personal credit card to pay business expenses, if you are doing so. Get a few business credit cards that are totally separate from your personal expenses. Verify if they notify the credit bureaus, while applying. Mostly all business credit cards include cash back programs or travel points, so you can get money to invest back in your business.
8. Keep a Regular (or Even Early) Bill Payment Schedule
Unlike your personal credit, which allows you 30 days for making a payment before dinging your credit, a business credit can hit you if you are even one day late. The fact is that the only way to earn a great “100” D&B PAYDEX score is to pay your bills earlier than the due date.
9. Choose Lenders that Notify Credit Bureaus
Your business credit will actually be boosted by small business loans when you make timely payments and the lenders notify this to the business credit bureaus. However, you will have to check whether the lenders really inform this to the credit bureaus, because all lenders don’t do that. So, while approaching lenders for loans, ask them if they report, prior to taking a business loan from them.
Typically, banks report to the business credit bureaus; however, in case of a bad credit, you won’t be eligible for a bank loan. Many lenders operating online who are in fact willing to give loans to bad credit borrowers also report to bureaus. But you should ensure if they do.
10. Ensure that Your Public Records are Clean
Apart from reflecting the history of your business of paying creditors, there will be public records filed in your business credit report on the name of your business which will include liens, bankruptcies and judgments. If a judgment is against you in case of a debt collection court case, it will create a negative point for your credit score. Such negative points may ruin the possibilities of getting a loan. So, ensure that your public records are clean.
Read Midwest Corporate Credit review to know how committed they are to connect small businesses to financiers and handling the time-consuming task of correspondence between these businesses and lenders. Their team is devoted to achieve results the right way for your profitable growth. Visit their site for knowing how they can help you.