What’s Your Business’s Credit Score? Why is it Important?

You begin building personal credit from the time you start making and spending money. All of the efforts you put in to keeping your personal credit sparkling clean is important so that you can get the credit you need when big purchases are needed, or when you have unexpected expenses that need financial backing. However, using that great credit rating to back your business is not smart. You risk too much by using your personal finances and family’s resources to boost your company. Even if your family’s budget can afford to keep the business running, any falter, or failure is likely to cause hardship, and possibly financial ruin.

Another reason, beyond the possibility of financial collapse, for separating your personal finance from that of your business is inquiries. The number of inquiries your credit gets has a negative impact on your score. Typical personal accounts are not hit that often with credit inquiries unless you are actively seeking financing. When you own a business and set up vendor accounts, lease land or office space, borrow or buy equipment, and many other times, your report will be looked at, adding to the number of inquires on the account. Making your business credit separate keeps all of those inquiries off your personal credit score.

Instead of taking chances with your personal credit and financial future, you should separate your finances from that of your business. That means starting with a blank slate for your company, though, and may mean it is impossible to get financial help. Once you successfully make the division between your money and your business’ money, you need to build its credit rating and guard it as carefully as you do your personal credit.

Business Credit Scores

If you already keep track of your personal credit score, as you should, you already understand the idea behind credit scoring. Those numbers you are accustomed to will throw you for a loop when you begin to track your businesses credit scores, though. The markers are not the same. Personal credit scores are rated from 300 to 850 with a good score being 650 or better. Business credit scores are rated from 1 to 100. A credit score of 75 or better is excellent.

The Big Three

Just like in your personal credit reporting, there are three major business credit reporting companies. These three credit report companies work the same as they do for personal credit. Two of the business reporting companies you will recognize, as they have a division that your personal debts are reported to: Experian, and Equifax. The third, Dun & Bradstreet, is a major force in business finance, and has many advantages and benefits for small business owners.

- Dun & Bradstreet

Dun & Bradstreet provides a wealth of information for business owners. The articles, reports, and services are of special help for small business owners who do not have the advantage of large in-house accounting staff, business experts, and financial advisors. Even if you have professional help and business counseling, those sources are not available to you at all times the way corporate employees are for their employers. It is in the best interest of a small business owner to make it their business to learn all they can on top of relying on the help of professionals.

The small business solutions section of the Dun & Bradstreet website offers podcasts, articles, white papers, and many other resources for all businesses. Industry experts from all areas of business finance develop the information provided on the Dun & Bradstreet website. Dun & Bradstreet is a highly respected credit reporting agency as well. Financial institutions use their information to determine whether to give loans to businesses of all sizes.

- Equifax Small Business Financial Exchange

The Small Business Financial Exchange (SBFE) provides credit cards, financial backing, and other backing for small businesses. Equifax is a partner with the SBFE and provides a credit background for any small business seeking credit with a SBFE member institution. Because Equifax is such a respected name in credit information, the members of the SBFE rely on it totally as a means of judgment.

- Experian Small Business Reports

Experian Small Business Reports operates the same as Equifax Small Business Financial Exchange in that it offers its members a method of underwriting loans by using a credit scoring system. Both Experian Small Business Reports and Equifax Small Business Financial Exchange are equal in value to the lenders and leasing agents.

Neither Experian nor Equifax offer the many benefits to the small business owner that Dun & Bradstreet provide. Experian and Equifax exist primarily to benefit their members who are the lenders and financers you do business with to get financing. However, registration with them so that you get a credit rating built up is imperative. It is very important to have a good financial credit score with all of the companies in question so that one does not single you out when you need a reference from another.

Beyond the Beginning

Just like with your personal credit, business credit is an ongoing effort. You need to keep a constant eye on what is going on, make sure all entries on your account are accurate, and prevent your business from incurring damaging reports. You need to get regular copies of your business’ credit report so you are aware of what lenders are seeing.

When you set up accounts with vendors make sure they report the good payment records as well as late payments to the credit reporting companies. Make your payments diligently to build up the credit rating that will help your business get loans when needed. Credit is important for other aspects of running your business beyond loans. Any time you wish to lease space, or rent equipment property owners will check your credit worthiness as a way of judging your qualifications.

When To Seek Help

The best way to insure a solid start is to seek professional help when you start your business. Getting off on the right foot can save you many hours of headaches trying to straighten up a mess afterwards. You may never get a second chance to clean up your business credit either. Unlike personal credit that you have a lifetime to work on, make corrections, and recover from a few bad decisions, a business will die when its credit dies. If you cannot recover it fast enough it will not likely get a second chance to develop good credit.

Professional counseling will make sure you truly separate your personal and business finances. It will help you file all the necessary paperwork for the legal issues involved with financial separation. Professional help will also make sure you are registered with all three of the appropriate business credit reporting entities. Professional business credit builders are likely to have a vast network of financial institutions they do business with and your connection to them is easier when your credit counselors open the doors for you.
If you already keep track of your personal credit score, as you should, you already understand the idea behind credit scoring. Those numbers you are accustomed to will throw you for a loop when you begin to track your businesses credit scores, though. The markers are not the same. Personal credit scores are rated from 300 to 850 with a good score being 650 or better. Business credit scores are rated from 1 to 100. A credit score of 75 or better is excellent.

The Big Three

Just like in your personal credit reporting, there are three major business credit reporting companies. These three credit report companies work the same as they do for personal credit. Two of the business reporting companies you will recognize, as they have a division that your personal debts are reported to: Experian, and Equifax. The third, Dun & Bradstreet, is a major force in business finance, and has many advantages and benefits for small business owners.

- Dun & Bradstreet

Dun & Bradstreet provides a wealth of information for business owners. The articles, reports, and services are of special help for small business owners who do not have the advantage of large in-house accounting staff, business experts, and financial advisors. Even if you have professional help and business counseling, those sources are not available to you at all times the way corporate employees are for their employers. It is in the best interest of a small business owner to make it their business to learn all they can on top of relying on the help of professionals.

The small business solutions section of the Dun & Bradstreet website offers podcasts, articles, white papers, and many other resources for all businesses. Industry experts from all areas of business finance develop the information provided on the Dun & Bradstreet website. Dun & Bradstreet is a highly respected credit reporting agency as well. Financial institutions use their information to determine whether to give loans to businesses of all sizes.

- Equifax Small Business Financial Exchange

The Small Business Financial Exchange (SBFE) provides credit cards, financial backing, and other backing for small businesses. Equifax is a partner with the SBFE and provides a credit background for any small business seeking credit with a SBFE member institution. Because Equifax is such a respected name in credit information, the members of the SBFE rely on it totally as a means of judgment.

- Experian Small Business Reports

Experian Small Business Reports operates the same as Equifax Small Business Financial Exchange in that it offers its members a method of underwriting loans by using a credit scoring system. Both Experian Small Business Reports and Equifax Small Business Financial Exchange are equal in value to the lenders and leasing agents.

Neither Experian nor Equifax offer the many benefits to the small business owner that Dun & Bradstreet provide. Experian and Equifax exist primarily to benefit their members who are the lenders and financers you do business with to get financing. However, registration with them so that you get a credit rating built up is imperative. It is very important to have a good financial credit score with all of the companies in question so that one does not single you out when you need a reference from another.

Beyond the Beginning

Just like with your personal credit, business credit is an ongoing effort. You need to keep a constant eye on what is going on, make sure all entries on your account are accurate, and prevent your business from incurring damaging reports. You need to get regular copies of your business’ credit report so you are aware of what lenders are seeing.

When you set up accounts with vendors make sure they report the good payment records as well as late payments to the credit reporting companies. Make your payments diligently to build up the credit rating that will help your business get loans when needed. Credit is important for other aspects of running your business beyond loans. Any time you wish to lease space, or rent equipment property owners will check your credit worthiness as a way of judging your qualifications.

When To Seek Help

The best way to insure a solid start is to seek professional help when you start your business. Getting off on the right foot can save you many hours of headaches trying to straighten up a mess afterwards. You may never get a second chance to clean up your business credit either. Unlike personal credit that you have a lifetime to work on, make corrections, and recover from a few bad decisions, a business will die when its credit dies. If you cannot recover it fast enough it will not likely get a second chance to develop good credit.

Professional counseling will make sure you truly separate your personal and business finances. It will help you file all the necessary paperwork for the legal issues involved with financial separation. Professional help will also make sure you are registered with all three of the appropriate business credit reporting entities. Professional business credit builders are likely to have a vast network of financial institutions they do business with and your connection to them is easier when your credit counselors open the doors for you.