EFFECTIVE STEPS TO BUILDING YOUR BUSINESS CREDIT
According to statistics, there are chances that 99% of businesses apply for loans annually and more than 70 percent of bank loan applications from small businesses are not approved.
Did you ever think it was an unravelling of luck and fate at play? No, it was not. It was probably as a result of you having a bad personal or business credit or even no credit at all.
We all hope the sun will always shine and there will be no rainy days but every smart entrepreneur has an alternative plan in case there is a shake-up of his or her financial foundation.
Early payment of debts is a life saver
Late payment to creditors plays a boomerang.
Most co-operative societies or financial institutions are registered with the credit bureau, late payment of credit tarnishes your credit image. It is very important to make payments to your creditors as at when due. This helps to increase your business credit score.
Don’t feed credit bureaus with suspicious information
Ensure information about you and your business are authentic, same and current. Each business credit bureau has a different formula for calculating scores, and different lenders report different types of data.
The more complete and unquestionable your profile is, the easier it will be to access loans. Keep your public record clean.
Build great trade relationship with your suppliers
If you buy supplies, ingredients or other materials from third-party vendors, those purchases could help build your business credit. Many suppliers extend trade credit, which means they allow you to pay several days or weeks after you receive the inventory. If you have this type of accounts-payable relationship, ask your supplier to report your payments to a business credit bureau. Your business credit score will get a boost as long as you stick to the terms of the trade agreement.
Your target should be lenders that report to credit bureaus
If you’re intent on building business credit, ask the lender whether they report before you take out a small-business loan. Banks typically report to credit bureaus, but if you have bad credit, you probably won’t qualify for a bank loan.