Do You Know Your Business Credit Score?
Your business credit score doesn’t need to be on the front of your mind every day, but it is an important number to know and to track if you’re seeking financing. Generally speaking, established companies with payment histories that don’t have any recent past due to balances will post healthy scores, but smaller companies sometimes struggle because even when they are perfectly healthy financially, they don’t usually have the long operating history that establishes a full credit history. In order to get to the point where lending is accessible when they need it, those companies need to build business credit scores for themselves, and that’s why it’s important that you know how to get that number if you’re starting a business.
Finding Your Business Credit Score
There are free resources out there to help you find out if your score changes or if a report has new debt events added to it, but those tools only give you a limited look at your score and report. To get your full credit report so you can work on getting the numbers where you want them to be, you’ll need to sign up for a service that monitors it and provides you with access to the records. Those aren’t expensive if you only need a one-time report. It’s about $40 to get it. If you’re looking for ongoing service you can count on while building business credit scores, though, you will wind up paying more for the full monitoring. Monthly costs on a complete credit service can be $150 or more.
What About Personal Credit?
It’s a bad idea to use your personal credit to fund your business for a lot of reasons. For starters, it keeps you from accessing those financial resources when you need help with your household’s cash flow, and that means you’re less personally secure. That, in turn, affects the choices you make as a business owner. More important than that, though, is that excessive debt hurts your personal score and when you own a small business, lenders look at both. This is especially true for sole proprietorship structures, so you will need solid business credit scores and personal scores.
Building Business Credit
Unlike consumer credit scores, business scoring is not very transparent. You can generally count on an increase in your score if you’re paying debts on time and you keep your total debt load in check, but beyond that, there’s not a lot that’s known about how credit types or payment issues are weighted for businesses. What is known is that you can get more positive reporting if you ask suppliers and utility providers to report your payments, and that can help build your score.