Being a business owner is kind of like being a fitness enthusiast, in the sense that you’re constantly focused on getting stronger. For example, you want to strengthen relationships with your customers, strengthen your brand, strengthen your reputation, and strengthen employee engagement. Indeed, even if your idea of a nutritious lunch is eating a donut (hint: please stop doing that to yourself), at least in terms of business health, you’re all about getting stronger and stronger. And that brings us to your credit score.
Strengthening your business credit score also needs to be on your priority list — especially if you want to negotiate better terms with suppliers, or get approved for business capital loans or lines of credit. With this in mind, here are three effective ways to pump up your business credit score muscles:
- Get a DUNS Number
A DUNS number is a 9-digit identifier from Dun and Bradstreet (D&B). You can use it to establish your credit file, which is what prospective lenders and suppliers will check (among other things) to get a sense of your credit history and overall credit worthiness. And if you’re wondering how much a DUNS number costs, don’t worry: it’s free.
- Tell Suppliers and Vendors to Report You to Credit Bureaus
Don’t assume that your roster of suppliers and vendors are reporting your excellent credit behavior (i.e. pays on time, pays in full, etc.) to credit bureaus. While this is a best practice, let’s face it: suppliers and vendors are as busy as you are, and this is just the kind of task that slips through the cracks. As such, be proactive and remind these partners to extol your virtues with the credit bureaus.
- Keep Personal and Business Purchases Separate
Sometimes, new business owners – more out of practicality than strategy – use the same accounts or credit cards for personal and business expenses. If you’re among them, then in the very near future put a financial wall between these two parts of your life. That way, when lenders and suppliers ask your bank statements to check or verify your business’s cash flow numbers, you can do so rapidly, clearly and professionally.
The Bottom Line
Just like building strong muscles, building strong business credit doesn’t happen overnight. But if you do the right things the right way, before you know it you’ll be flexing your credit muscles with pride – and lifting your small business onwards and upwards.
Great advice! Advising your suppliers and vendors to report your good credit behavior to the three credit bureaus is an excellent strategy too.