For owners of new and young small businesses, there are a plethora of elements that need to be managed and overseen every day to ensure success. While focusing on income, expenditures, employees and marketing, thinking about your business' credit can sometimes fall by the wayside.
To ignore your business credit score could be a fatal mistake. It's an essential link in the chain of success. If you're concerned about your company's image from the viewpoint of your customers, you should be just as concerned about how your business credit looks to essential people like lenders and potential business partners. Think of how your personal credit can affect your life. Well, the difficulties that bad credit brings for an individual can end up plaguing your firm too. It's also important to remember that anyone can view your business credit report and score for any reason, unlike the information in your personal credit file.
With the relentless pace of activities that come with running a small business, it may seem overwhelming to add yet another task to monitor. But your company depends on it, especially if you’re looking to grow. There are plenty of available resources that can help you learn to manage your business credit. Experian is one company that excels in helping businesses manage credit by offering several services -- business credit reports that show detail tradelines, payment trends, credit risk scores, monitoring alerts, industry benchmark data and more.
Now is the time to start focusing on your business credit score. Here are some tips to get you started.
Step 1: Check
Know what’s in your business credit report at all times and understand your business credit score. Your business credit report is used to make important financial decisions about your company - how much money lenders will loan, how much credit suppliers will extend, and what interest rates to charge.
Step 2: Correct
Be proactive. Make sure your business information is accurate and up-to-date. Outdated or incorrect information can give the wrong impressions about your business, resulting in unfavorable decisions that negatively impact your bottom line.
Step 3: Protect
Monitor your business credit report regularly and sign up for alerts that warn you of changes that could indicate fraudulent use of your business credit information. Popular alerts include notifications on inquiries and new trade lines. Furthermore, protect your business from non-paying customers, partners and suppliers by checking their business credit report before doing business with them.
Step 4: Separate
Many small business owners don't separate personal from business expenses and therefore don't build business credit tradelines. In the beginning when starting a business, using personal guarantees and credit is needed. However, the weakness of relying solely on personal credit is clear. If your business ever becomes at risk, your personal credit score becomes at risk as well. Failing to separate business from personal credit also can limit your business growth potentials.
Step 5: Grow
Managing the factors that drive your score can make a positive impact and lead to more opportunities to grow your business, ranging from gaining capital to gaining customers. Therefore, take good care of your small business name and reputation. Choose to work with lenders, suppliers and creditors that report your payment history to the credit bureaus. And of course, pay your bills on time.
When you take the time to build and maintain your business credit report, you'll be building your business' reputation and ability to succeed. For more information on business credit resources, plus articles and tips on the subject, go to www.BusinessCreditFacts.com. To sign up for business credit monitoring services from Experian, visit www.SmartBusinessReports.com.
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