If you’re looking to build business credit, you may ultimately want to apply for business funding. A solid business credit history is a good indicator of financial responsibility and is typically a requirement to qualify for a business loan. Read our guide to learn more about business credit and how you can build yours fast.
What Is Business Credit?
Business credit is used to measure a company’s creditworthiness, or their relative financial responsibility. Similar to personal credit, business credit bureaus use a company’s recorded financial history to calculate a numerical score that reflects their likelihood of debt repayment. The higher your business credit score, the better your chances are of getting approved for a business loan with more affordable rates.
Why Do I Need Business Credit?
Even though you may not need a loan right away, business funding is often necessary to help businesses grow. Business lenders may require applicants to meet a minimum credit score in order to qualify for a loan. Additionally, creditors may require a business owner’s personal credit score to meet a certain threshold to be considered for a business loan.
How Do Small Businesses Build Credit Quickly?
Once you’ve followed the steps to establish your business credit, you can seek out tradelines or apply for net terms with other businesses that report payment data to one or more of the major business credit bureaus. This payment data — analyzed by business credit bureaus — is crucial to start building your business credit score fast.
Keep in mind that making on-time payments is essential for quickly building good business credit, while late or missed payments can negatively affect your credit score. You should also periodically monitor your full business credit reports from each of the major credit bureaus.
Where Can I Monitor My Business Credit?
Monitoring your credit reports is another important step to building business credit quickly. Like personal credit, not all payment data gets reported to every credit bureau, so your credit scores may vary. Additionally, credit reporting errors are rare, but they can impact your credit. Make sure to review your full credit reports for accuracy and dispute any errors in a timely manner, if necessary.
In order to get the best picture of your credit health, carefully review your credit reports from each of the major business credit bureaus, including Experian, Equifax and Dun & Bradstreet. You can access your full report directly from each bureau or sign up for a business credit monitoring service to stay on top of updates.
