What is a Business Credit Score? How to Fix Bad Business Credit? How to Fix Flaws in Business Credit Report? Learn here everything you wanted to know about business credit.
Are you not sure what business credit is?
Well, you’re not alone as many small businesses don’t know what business credit is.
According to a report by NAV, a business credit score company, 45% of small business owners have not idea about their business credit score while a majority of them don’t know how to understand the score.
But we urge you to stay informed on the nitty-gritty of your business credit. Business credit qualifies your business for borrowed money that can be used to purchase products, especially when it is challenging to fund your business on your own. Building business credit is downright essential for businesses of all sizes, all types.
Here we have rounded up important things about business credit you should know.
What is Business Credit? How does it work?
A business credit score is just like your personal credit score.
Business credit records your financial activities that investors or lenders use to determine your ability to pay back the loan or borrowed money.
Many agencies calculate business credit with each has a different method. The business credibility is generally ranked from 0 to 100. The higher the number, the great your credit score is. A score of 80 or higher is an ideal credit score for businesses.
Credit scores are based on various factors, such as bankruptcies, payment habits, credit information provided by your lenders and suppliers, legal filings and company background information.
Will the Data Remain on Business Reports Forever?
No. The data on your business reports will be placed temporarily. Each factor that determines credit score lasts for a certain time.
For example, bankruptcies stay on the records for 9 years and 9 months, trade data for 3 years, judgments for 6 years and 9 months and the data from bank or government organizations for 3 years.
Why Is Business Credit Important?
Business credit helps investors and lenders determine whether or not to fund your business. And this is crucial when your business needs emergency funding. Small Business Administration has found that delayed funding is one of the most common reasons for business failure. Keep in mind that business credit scores are not confidential, anyone can view them.
Having a great business credit score helps you get funding at better interest rates.
How to Build a Business Credit Score?
By this point, you must have understood business credit score as well as their importance. How to build a business credit score?
Although there is no hard and fast rule to improve a business credit score, some steps can ensure that your business credit report reflects the optimal scores possible for your situation.
How to Correct Your Business Credit Score?
As we have said earlier that it is important to check your business credit score more often. What if you find some flaws in it? Don’t make errors on the report lightly as they might affect your credit score.
Make sure to fix them instantly as soon as you view them. Luckily, it is not that stressful process.
Building a business credit should be one of your topmost priorities as an entrepreneur. It will help you get funding easily along with a good interest rate. It is equally important to keep track of your business credit for accuracy. What do you think? Let us know by commenting below.