How to Monitor, Maintain, and Build Corporate Credit

How to Monitor, Maintain, and Build Corporate Credit

Building credit is important for any business just as it is for any individual. Many businesses find that as they try to grow and expand, they lack the ability to obtain the finances they need because they didn’t take the necessary steps to build a stable credit history. However, the good news is that there are a number of steps you can take to reach your goals, and achieve a reliable source of credit for all of your business’s needs.

How to Build Corporate Credit

Corporate credit is important to any successful businesses and a wide range of factors can affect it. Your personal financial history will often be the first thing that banks and other lenders look at when deciding on the creditworthiness of your business. They’ll also want to know the information for any partners you might have or other owners. One other step you can take is to separate personal finances from those of your business. Consider applying for a Tax Identification Number, which you can use to register with credit reporting agencies and build up your business’ credit history. One of the most recognized reporting agencies is Dun & Bradstreet, which compiles a Paydex score for businesses. This measure solely examines your business’ payment history toward its financial obligations, and whether they fell within the terms which were originally agreed upon. Just like with consumer credit, there are several agencies which report on the credit history of your business, and which measure it by the bills you pay, how often they are paid, and whether or not you are able to meet your financial obligations on time. You could find that you can obtain a better score by even paying some bills ahead of time. When it comes to ways you can build corporate credit, the sooner you begin, the better. You’ll want to ask your bank or credit union for a corporate credit card, and begin paying for expenses with bank accounts and credit cards set up through your business.  You might be turned down at first, but if you start small and begin progressing to larger limits on credit lines, cards, and more, then you can soon have a reliable set of options which you can draw on for the money you need when expenses arise or when you have the opportunity to pursue the growth of your business.

Monitoring and Maintaining Corporate Credit

Like with consumer credit, you will want to stay on top of your financial obligations with your business. Be sure to set aside enough money to pay for any debts you might incur, and keep your balances within 20-30% limits for credit cards. Overleveraging can place your business in dire straits should your revenue stream face any problems, and the last thing you want is to face are calls from creditors and the dangers that can come with a poor credit rating. Many businesses face fluctuations in their credit score, so be sure to have multiple sources. You’ll also want to conduct quarterly credit reviews to monitor any changes and to plan for the future. Follow these steps, and you could have the financing you need!