How To Build Your Business Credit Score
For a business to be in the favor of different lenders and to obtain the necessary funding for its future capital needs, having a favorable credit score is very vital. But a good credit rating does not come in an instant, and for any business owner, there are certain steps to follow.
These steps will help improve a business’s credit rating, as well as maintain a favorable reputation to lenders and investors.
1. Make Sure Your Business Has A Legal Structure(Entity)
Your business will not be able to build business credit if it does not have an entity/legal structure unto itself. It is necessary for you to be incorporated or to form a Limited Liability Company (LLC). It is highly unlikely to give business loans to sole proprietors.
2. Have A Physical Address, Telephone #, Email and Internet Service
Having a physical location for your company adds credibility for lenders to believe that your company is legitimate when your office address is not your own home address. Also, having a telephone number, email address and a website, are essential.
3. Check Your Business Listings
Have your company enlisted under all the necessary agencies and make sure that all your listings are under the same exact legal name as well as with the same exact phone number and address. It is very important for all your personal creditors to have you listed under a uniform identity.
4. Obtain Necessary Business Licenses, Permits, Etc.
Obtain a business license for your company and, if applicable, a license for tax resale in the state, city or county location of your business. Follow all the necessary regulatory guidelines for running your business.
5. Organize Financial Statements & Tax Returns
Be ready to present at least two years of financial statements, with which the help of a CPA is highly recommended. And it is also very important, that your business at this time should already have its own tax ID number. Both federal and state business tax ID numbers should be enlisted under the same exact legal business name.
6. Secure Bank References
A minimum of one bank reference is necessary for your business to establish its score. And it would be advisable if your bank account were at least active for a couple of years.
7. Obtain Trade References
Your business will need trade references that have given you a credit account. This may include your suppliers or any firm in which your company has purchased goods, preferably at a regular basis. Make sure to choose references that will give a favorable credit history to agencies investigating on your financial history.
8. Credit Report Agency Reports
Get three business credit cards that do not have personal links to you, and that will give business credit reporting agencies their feedback on your company.
After doing all these, just remember to play your business in a clean and fair game and of course, pay all your bills on time, and your company will likely have an excellent credit score.
How To Use Business Grants To Fund Your Business Idea by Michael “MJ The Terrible” Johnson – https://www.therealmjtheterrible.com/how-to-use-business-grants-to-fund-your-business-or-product-idea-newly-updated/
