Know Your Business Credit Score

You've got a great idea, the financial capital, and know-how to make it happen. But entrepreneurial success also depends on something else many small business owners must pay attention to: their business credit score.

Just as your personal credit history impacts your financial health, so too does business credit which can help you get competitive business loan rates and flexible payment terms from potential suppliers. Having complete, up-to-date information on your business credit report, and a good business credit score is the best way to obtain favorable financing.

The current economic climate makes it more important than ever for small business owners to know their business credit score. Small businesses, which are often challenged with managing cash flow, are especially vulnerable to economic changes. A strong credit score can help these business owners access additional capital during difficult times.

Don't assume that a favorable personal credit score will be enough to secure good business credit terms. While lenders and vendors may initially consider your personal credit history, once your business pays its first bill, it will begin building a credit history on your business.

Here are some basic facts every small business owner should know about in building a business credit rating:

• Business scoring is much less regulated than consumer credit scoring. The process of scoring your business is much more complicated and less clear than the consumer scoring process.
• Just because you have a business, don't assume you have a business credit score. Credit reporting companies require a minimum amount of information before they can generate a report and score for your business. To establish your business credit history, encourage vendors to report your payment history to one of the major credit reporting companies. Many credit reporting companies can provide you with information on suppliers who report to them.
• Don't rely on your personal credit rating to finance your business. If your business becomes at risk, so will your personal credit score. Keep in mind that many creditors are now looking at scoring tools that consider both personal and business credit to predict small business risk.
• Access to business credit scores and reports is not restricted like personal credit reports. Business credit reports are available to the public, and anyone - including potential lenders, suppliers, and competitiors - can view your business credit report. This makes it imperative to monitor your business credit score and report.
• You can proactively manage your business credit score. Ensure your vendors are reporting your business payment history, and monitor your business' credit on a regular basis. Call us to learn more about accessing business credit reports and information about the business credit scoring process.