How do you know that you are qualified for a business credit? Have you ever experienced a time when you applied for a business credit, but turned down right away, without any further explanation? This could be due to your credit history on your business. What could you have been doing in the past few years since you started your venture may have affected their decision. It doesn’t have anything to do with how new you are in the industry. It could be because your business credit history is puzzling to them, that they have a hard time deciding how much they are going to lend you or if you are really a low-risk borrower. Read on to find out the ways on which you can build up on your business credit.
Monitor personal credit rating. The major factor that decides the banks’ offer in primarily lending money to businesses is looking at the personal credit ratings of the owner, and most of the time they look at the score at least in the middle of 600s, according to the chief executive and co-founder of MultiFunding LLC, which is a company that helps various businesses link with different lenders. In order to increase your credit score, keep it a habit of paying all your personal bills on the right time, at least keep a good, low ratio of the debt available in your personal credit lines and credit cards; and lastly, try to make sure that the balances in each of your personal credit card under thirty percent from the limit given to each of it. Additionally, every lender may sometimes check out the personal credit of any of your business partner or investor that has more than twenty percent stake in your business.
Apply credit before needing it. To start building on your credit, apply for a little bit of credit as soon as you start up with your business. Small businesses will need at least a minimum of two years to establish itself before banks feel safe to lend them or give them a good amount of credit line. But there are cases in which small businesses can get past that, under certain conditions. These can either be applying for a small loan from the bank, or applying for a business credit card. If you have difficulty in getting just a small loan, you can try opening a credit line based on a store or just acquiring a small credit card that is secured that has a low limit. There are major retailers that offer such features to small businesses, like the Home Depot or OfficeMax.
Use and grow your credit. A lot of businesses that has an enviable credit history that are applied early for business credit lines and credit cards should be used as early as you can. Once you have built up on the payment history, try to request an increase of your credit limit, even if there is no need for it. You also need to check out your business credit profile through Dun & Bradstreet, a reliable credit and business data-reporting agency.