What’s my Business Credit Score?

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Once you open a business, there is a business credit score created. You may ask, “What’s my business credit score then?” Your business credit score will significantly affect the quality of the business credit lines you can obtain.

Businesses that are not aware of their business credit score do harm to their future operations by not paying attention to their credit reports (just like personal credit reports).

If you have a business credit card for your company, you probably have “company credit history”, whether you recognize it or not.

What is Business Credit?

When first starting a businesses, it is easy to accidentally pay bills late, or run into a financial mess early on, when your liquid assets dry up between sales.

There is also the tendency for new businesses to charge less for their goods and services in order to compete with established businesses. This under-cutting of other competitors can also get a new business into financial trouble.

The greatest distinction between both is that an individual credit rating gauges the credit reliability of a certain person, whereas a business credit history measures the creditworthiness of a business.

Business and also personal credit rating exist for the exact same reason: The banking/lending industry must have a way to assess the credit reliability of a debtor.

Just like a personal credit report, all of these positive and negative items concerning your business go into the database of the 3 main reporting agencies: Equifax, Trans Union, and Experian.

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What are the Differences Between Personal Versus Business Credit?

There are a few distinctions worth keeping in mind, though.

How Credit Details are Tracked

Firstly, there are three companies that keep track of any credit details reported to them about your business. They keep track of many different variables, including whether your business takes out many different lines of credit and the extent in which they are used.

Nonetheless, some criteria (frustratingly beyond your control) are additionally included, like your time in company, your sector, as well as the variety of people you employ.

Unlike a personal credit history, your business credit report is packaged from all three agencies and reported through Dun & Bradstreet.

Dun & Bradstreet is the credit reporting agency that lenders trust when it comes to business credit scores because they have a long history of providing credible market research. Dun & Bradstreet knows about every business on your block and reports on a wide variety of items affecting their business credit score.

More Uncontrollable Factors

Second, there are items that a business owner can control, and others they cannot. Things that you can control are paying your bills on time (especially to banks), as well as using a professional service like High Risk Solutions to help keep your business credit report in good standing.

Ultimately, you may not have complete control over specific variables, like your business’s age or the industry you fall into. The industry that your business is a part of will make a difference on what is reported, based on how credit lenders see the industry as a whole.

Easy Access to Business Credit Information

Thirdly, other people could access your business credit score without approval, which isn’t generally acceptable with a person’s individual credit rating. Your business credit rating is a matter of public record, and can be accessed just by someone wanting to do research into your business. This is one area where businesses do not protect themselves enough.

Imagine how easy it would be for anyone to check up on your business to see if you are worthy to do business with. For businesses with long-term contract requirements, your business credit score can mean the difference between getting a huge contract or not.

The journey to a better business score is no vacation if it is not taken care of properly.

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Age Matters

The age of the company matters to these reporting agencies because of the success rate of businesses. With time, the business is seen as more resilient, and therefore, more credit worthy.

Just like you need to be a certain age to vote (or to get a decreased rate in your car insurance at a certain age), your business needs to be able to prove it can handle the responsibility of paying back a creditor.

As far as your company is concerned, lending institutions would much rather take on risk from well-established companies. If your company is too new, you may find that your company is labeled as “high-risk” whether you have done everything correct or not.

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Checking your Business Credit Report is Not Required, Right?

Certainly, you do not need to check your company credit score. It costs money; it is a hassle. And on and on. But, why not?

By ignoring it totally, you may be uninformed when your rating takes an unanticipated dive. Imagine thinking your business is going fine, and then out of nowhere, your credit lines dry up.

It makes total sense to check your business credit report as often as you can. It is best to be proactive about searching for and correcting mistakes.

Your business has a reputation to maintain. Upsetting your credit rating early on, can cause your business to struggle much longer than necessary.

How do I Fix my Business Credit Score?

Like a personal score, the business’s repayment record is considered.

Some business owners try to make the business run solely on the initial liquid capital they have raised…to get things going. They overlook their need for a merchant account, in order to accept payment for their products and services. They assume it will be easy to acquire the means to accept credit cards.

This is not a good strategy.

You can decide from the beginning that you’re going to forego lending institutions and depend on outdoor funding or suppliers, recognizing your credit score may be less important to you.

However, a strong business credit rating is the trick to obtaining approval for trade credit as well as funding.

Even more importantly, those ratings may assist you in receiving better terms when you request financing or apply for a business credit card.

Measuring the credit history of your competitors is legal to do and recommended. Your competitors may be monitoring your business to see when it would be a good idea to make you ‘an offer you cannot refuse’.

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What’s my Business Credit Score in Conclusion?

Every company has credit scores, as well as business credit rating reports.

In the same manner that your individual scores act as financial rankings, your business credit rating measures the credit reliability of your business.

In bad times, it could be a financial safeguard, making it less complicated to borrow money and keep your company on solid footing.

In excellent times, a good company credit report could assist you obtaining even more financial resources to grow your company.

Yet you should always strive to improve on particular points, like paying in a timely manner, and not utilizing a high percentage of your available credit line.

Obtain your business credit report records, and you’ll be well on your way to creating a greater business credit history as well as obtaining more positive financing terms.

High Risk Solutions has been in operation since 1995. This company has maintained operations through all of the economic turmoil of the last 3 decades.

If your business is in need of high-risk merchant credit assistance, you are at the right place.

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