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How to Build Your Small Business’ Credit Score

Credit scores aren’t just for personal finances.

Small businesses often need to go to lenders for financing. And naturally, those lenders don’t want to dole out money blindly. Just like a bank wants information that indicates whether a person can pay off their mortgage, it’ll also want to know its chances of getting a full return on its small business loan.

Enter the business credit score.

Dun & Bradstreet (D&B) joins personal credit-score bureaus Experian and Equifax to provide lenders with information about businesses’ creditworthiness. The better your pattern of behavior, the better off you are – and the likelier you are to be approved for credit and enjoy better terms on financing.

But how do you start building your credit score, and if you’ve been operating for a while, how do you make it even better? Read on as we explain how to build your small business’ credit score.

Business Credit Score Tips

Get on the Bureaus’ Radar

There are a couple of basic identification numbers that you should apply for soon after forming your small business. For one, you’ll want to apply for a federal employer identification number (EIN), which you can do for free. You’ll also want to request a D&B D-U-N-S Number – a nine-digit ID number that you can get for free if you’re required to register with the federal government for contracts and grants. The major credit bureaus can use both of these numbers to identify your financial activities.

Find Reporting Vendors

When selecting vendors for your various business needs, ask whether they report payments to the major credit bureaus. Build relationships with the best vendors who do report – and importantly, make sure you prioritize paying these particular vendors on time at worst, and early if at all possible.

Get a Business Credit Card

When you pay off a personal credit card, you build your personal score. Paying off business plastic has the same effect on your small business’ credit score. For what it’s worth, this isn’t the only reason to get a business card. Separating your personal and business expenses is an easy way to simplify your life come tax time – and avoid unpleasantness with the IRS.

Keep an Eye on Your Score

Even if you do everything right, your small business’ credit score could still get dinged up. After all, people make mistakes. Unfortunately, while reporting errors might not accurately represent your actions, they can still weigh on your score. So remember to regularly monitor your report to make sure you’re recognized for your good behavior … and not unfairly punished for someone else’s sloppy bookkeeping.

Talk to the Pros

A high business credit score can yield thousands of dollars in interest-rate savings, not to mention all the financing doors it can open. That’s why it pays to talk to pros like the accounting and business experts at McManamon & Co., a firm that specializes in small and midsized businesses. Our skilled business consultants can help you with a wide range of financial matters, including how to better manage your money and improve your credit score.

It’s never too late to build your small business’ credit score. Get started today by reaching out to us. Just call 440.892.8900 or contact us online.

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