Keeping Your Eyes Trained On Your Business Credit Score

As the owner of a small business, be it a new one that's just finding its feet or an established one, you do know that there are few things on your plan that are more important than the job of managing your finances properly. Your ability to manage your business credit record responsibly and effectively should be one of the most important things you do here.

Business credit doesn't work much differently than individual credit does. You do need to realize though that the credit rating that your business enjoys should be kept separate from your own. If your business is to stand up on its own and survive as a separate entity, it needs to be able to establish and maintain an independent credit reputation.

Why does your business need to stand on its own reputation? The answer is simple - when your business needs to borrow money, it will get far lower rates if it has a great credit score. You need to keep your business finance completely separate from your personal stuff. Your business has its own credit cards, its own business account and there's no reason they should ever mix.

Of course, there's a lot more to getting your business a good credit reputation than just that.

The first thing you need to do is to establish one name for your business that you decide on. You need to use it everywhere and for everything. It has to be the same name, address and contact information right from the start. This is the only way the credit reporting agencies will be able to keep track of your business and to know that it's been a responsible and dependable entity for a long time.

Whatever purchases you make for your business, you want to pay them through checks written on your business account. You want to make sure that vendors you do business with actually do report to the credit agencies. Make sure that you pay even before payments are due. You get extra credit for that.

When you go in to apply for a loan for your business at any time, the lender will usually ask to see earnings statements and tax records for your business. They also want to see how well you plan for the future of your business - they want to see a business plan too. This kind of thing goes in your favor.

For businesses, Dun & Bradstreet has a big name and credit reporting. As soon as you get into business for yourself, apply for a DUNS number. It'll take a month to arrive. Once you do that, you want to make sure that whatever business your business deals with, report to D&B. You want to milk everything as far as possible.

And finally, do check your business credit from time to time. PAYDEX is the firm that compares credit scores for businesses. The top score for businesses is 100. Get anything above 80, and you are doing well.