Apart from maintaining a personal credit report, your suppliers and creditors are using the business credit report before lending and making any credit decisions. So you must understand the importance of establishing business credit report separately if you own a business.
Before claiming a business credit, you must get the credit forms to obtain your present year credits. The website https://www.irs.gov/businesses/small-businesses-self-employed/business-tax-credits contains different forms to claim each of your business credit including general business credit, electric vehicle credit etc.
To make sure whether your suppliers or creditors validated your details you must do the following four steps.
The first step is incorporate or creates a Limited Liability Company so that you can make sure that your business is considered as a separate business entity. Then you want to get a Federal Employer Identification number. The third step is you must establish a business bank account in the name of your legal business. The last step is getting a dedicated phone line in the name of your business firm and check whether it is listed.
After completed the above steps, you can demand the business credit in the name of your firm. Making a strong business credit report provides your suppliers and lenders quality details about your business and enhances your potential to get loans and raise your credit limits and also create more favorable credit terms. You can check your business credit report right away to verify what the suppliers and creditors see.
You must use your credit cards for most of your purchases since this will help you to maintain a good credit score. You must ensure that you never reach the maximum limit. It is better to curb your spending amount to 20-30% of your maximum limit.
You can secure a loan from the lenders who report your payment details to the credit bureaus. Availing small business loans will definitely enhance the business credit when you can make payments without any delay and not all your lenders will report to the business credit bureaus. So before borrowing loan from a lender, you can ask whether they will report your credit details to the credit bureau.
Banks will normally report to the credit bureaus but people with poor credit score will not get a bank loan. There are numerous online lenders who are willing to lend money to business owners with bad credit and they will report to credit bureaus.
Then you want to make sure whether your public records are clean. If the business credit report contains any public record details such as judgments, bankruptcies and liens then you must ensure whether it is clean. Judgment is a court order and if it is against you then it affects negatively on your credit score. You must remember that any negative remarks on your business credit report will affect you.
Developing good business report can offer you several advantages such as getting business loans at lower interest rates, better payment terms from your lenders, and business credit cards. You should also remember that your business credit score differs since each credit bureau calculates it differently.