How to build Business Credit
To start building business credit, a business must first be registered with business credit bureaus. When applying for business credit, it’s important to make sure all requirements of the credit market are met—it’s surprising how many applicants miss the basics such as phone lines and business licenses. Not complying with market requirements can raise red flags both with the credit bureaus and potential lenders. The website iBank.com offers information on current business credit market requirements.
One common problem with the business credit report is that it’s not as regularly updated as consumer reports. Financial institutions are not required to send in business credit information, so the data on reports may be incomplete and/or outdated. In fact, it’s not uncommon for a business to rack up credit for several years without the credit bureaus knowing about it. Once credit has been granted, it’s up to entrepreneurs to make sure that the records are forwarded to the credit bureaus. Making regular monthly payments can help keep the records active.
Needless to say, it’s vital to make payments on time to build a good credit reputation. It’s best to look for lenders who will grant business credit without performing a personal credit check—too many inquiries can affect credit score and, subsequently, using personal and business accounts can double the inquiries made.