In order for your business to enjoy success, there needs to be a whole lot of factors that line up perfectly. And while you may assume it’s all about the profits and building your customer base, there are other ingredients that will help you to achieve success and at least make the path a little smoother to travel.
Business credit is something every business needs, but far too often entrepreneurs and new businesses confuse it with personal credit. The two are completely separate from one another, which means even with excellent personal credit you still need to work on your business credit. Having good business credit means you’ll have easier access to funds when needed. So, what can you do as a business to grow your credit? Here are four tips you can use.
Make Sure You Have Formed the Correct Type of Business
Experts suggest that the first place you start is with the formation of your company – making sure you have picked the right type.
What’s the “right type”? That would be an LLC, which is a limited liability company. Your other option is to incorporate the business.
Essentially what this does is set the business up as its very own entity that isn’t tied to your personal finances and credit. You can then proceed with opening a bank account for the business in its name – again, it is separate from you and your personal banking.
Make Sure Bills are Paid on Time
The next step is to ensure you have a streamlined and effective accounting system in place so you can pay all bills on time. Once you start making late payments, it will reflect poorly on your business’s credit score. You may want to set up automatic payments, or some sort of reminder system that alerts you when bills are coming up due.
Make Sure the Business Credit Report is Accurate
Sometimes you can be hit with a poor credit rating by an error. It may be that an old debt or incorrect information is sitting on your report. This is why it’s a good idea to get a copy of the business’s credit report and ensure that everything is accurate and that there is no information that needs to be deleted.
Personal Credit is Still a Factor
For all the emphasis on the fact that business and personal credit are two different things, many lenders will still look at your personal credit rating. What this means is that you still need to be mindful of your own personal finances, making sure your credit stays in good standing. Improved business credit requires effort all across the board, including where your personal credit is concerned.
It’s a Marathon Not a Sprint
Growing your company’s business credit is all about continued efforts. It’s not something you can change overnight; it is something you always want to be mindful of and take the correct steps to further it along.
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