ist magazine July 2021

Feature

Just because you pay your bills on time doesn’t mean you should assume your credit report is good.

2 A positive business credit report matters. A business credit report shows credit-related data a credit reporting company (CRC) has gathered about an organization from different qualifying sources. This includes records of credit card balances and payments, as well as public records, such as bankruptcies. Having a rich business credit report can help you get better terms on busi ness loans and other financial relation ships needed to manage and grow your business, including lower interest rates. 3 Be proactive to strengthen your business credit report. If you get a consumer loan, that information may be reported to all three bureaus for your consumer credit report. On the business side, there’s less data consistency and less chance your lender is going to report to all the com mercial credit bureaus. Be proactive by using strategies that include reporting to the bureaus, such as utilizing small business credit cards. You can also work with vendors that knowingly report to the bureaus. Finally, as always, pay all bills on time and keep debt low. 4 Separate yourself and your business. Just like with consumer credit, it takes time to build a rich credit history. Business owners should start building good credit as soon as possible and start by establishing a business entity. The

majority of small-business owners in the United States operate as sole proprietors, which means they don’t have a formal business structure such as an LLC, S-corporation or C-corporation. Having these types of designations separates you and your business and therefore sepa rates your business and personal credit. 5 Avoid tapping personal assets. When starting or growing a business, a lot of people use personal assets such as savings, retirement funds or home equity for funding. Before you do this, exhaust all other possibilities for business financing. There are over 6,500 different companies with lending products for small-business owners, so it’s worthwhile to research and find one that fits your needs so you don’t have to put your per sonal finances at risk. Plus, many of these other options come with the opportunity to build your business credit report. 6 Check your business credit report regularly. Just because you pay your bills on time doesn’t mean you should assume your credit report is good. If something negative occurs, you want to respond quickly, such as financial fraud or identity theft. Visit VantageScore. com to access a list of free credit score providers for both your personal and business credit reporting purposes. Q

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July 2021

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