Your business has strong cash flow, a strong balance sheet, and strong contracts from customers ensuring a solid future, do you still need to worry about establishing and maintaining good business credit? In short, yes. Credit is used for more than simply applying for a loan or credit line, many vendors and prospective customers in a growing number of industries will perform a “soft pull” against your business before agreeing to sell, serve, or buy from you. You heard that right—you might miss out on business opportunities simply because you ignored your business’ credit worthiness. With that in mind, here are a few simple steps to regain control of your business’ credit future.
Get Vendor Payments On The Record
Establishing a payment history with credit bureaus isn’t always about paying bills with the business credit card. If you have vendors you’ve worked with for any length of time, ask them to report your payments to credit bureaus. This can be a double-edged sword, as now you need to be sure to pay them on time from here on out. Establish this practice with at least 3 vendors to gain a Dun & Bradstreet Paydex score.
Know What’s On Your Public Record
From bankruptcies to liens to judgments, all of these negative reports are considered in your total business credit worthiness score. If you’re already aware of a negative report on your public record, there are statutes of limitations for each, varying by state, so if it’s near expiration, watch for it to fall off your record if the account was settled. If it’s fresh, hire an attorney to help clean your public record by settling the account and negotiating with the reporting agency and plaintiff to have it stricken or at the very least, closed.
Borrow From Lenders Who Report
Credit scores are only as good as the data reported, so if you’re borrowing from a lender who does not report, your good account history and timely payments will have zero impact on your score. If you’re in this situation right now, either negotiate with your lender to begin reporting, or find a commercial finance lender who does report, and refinance out of the old account.
Remember: developing strong business credit is not simply useful when you need to borrow, but can impact your ability to expand your business organically. If you are looking for a commercial lender who can help you achieve the next phase of business growth, give us a call.