Having great credit isn’t just a good idea for personal reasons, your business needs to have a great score too! While modern lending API software has made it easier than ever before for borrowers to get access to favorable terms, having a high credit score can only help. Building company credit is key to making your company look better to investors and customers alike. With just a few steps in the right direction, your business’ score can start skyrocketing in no time!
#1. Establish Your Business
The first thing to creating a stable base for your company credit is to establish it as an institution. Even the most advanced lending API solutions can’t help a business that doesn’t have a name. This can be done in a variety of ways, including:
- Sole Proprietorship
- Partnership
- Corporation
- Cooperative
- Limited Liability Company (LLC)
This also means creating a legal name, setting up an official phone number and emails, and other aspects of a standard and well-run business should have. Once your company is established you can begin to create connections with vendors that report to credit bureaus to get your business name on ledgers in the business world!
#2. EIN and Bank Accounts
While American citizens need Social Security Numbers for tax purposes, companies need to have an Employer ID Number to help handle their government-based fiscal obligations. This is integral to opening new bank accounts that are separate from personal finances. A business bank account helps to build your credit by showing lenders the company has legitimate assets with a regulated institution.
#3. Business Credit Cards
Having a company credit card is one of the easiest ways to build credit scores, as long as balances are kept under control and payments are made on time. At first, it’s important to use these kinds of loans carefully, but as your company grows it will become easier to manage several loan and credit accounts that help your company run. With state-of-the-art lending API technology, all of your accounts can be integrated seamlessly as well, making tracking your credit balances a relatively simple task.
#4. Personal Credit
If you’re looking to get a leg up on your business credit, it’s important to remember that your personal score may come into play as well. First-time business borrowers may need to use their own scores to bolster the bank’s confidence in a loan. A higher credit score on your end will make your business look better and help lending APIs offer you a much better rate on lines of company credit.
Building business credit is somewhat easier than when trying to increase personal scores because there are fewer variables to take into account. This makes business scores easier to raise and ones tied to your own accounts a little tougher, but paying bills on time will help to lift that number to a respectable level.
#5. Use Credit Wisely
One of the worst things new companies do is use their credit as free money to build their business. Like most cards, business credit has recommended uses that help to build or work to lower the company’s score. Most lenders suggest not using over 30% of the upper limit, though a good lending API may give you excellent terms for higher ranges. Even so, keeping a close eye on the company’s credit score can help you get more loans down the road.
Maintaining Great Credit
Getting a great credit score is difficult, and keeping it there takes just as much work. Financial departments need to keep a close eye on their balances and payment schedule to avoid missing crucial dates, deposits, and withdrawals. Some ways you can help keep that score high include:
- Schedule bills to pay automatically
- Create and follow a comprehensive budget
- Know your credit scores from each agency
- Pay down debts in a timely manner
- Overpay monthly bills
Once your company has great credit, you’ll want to do whatever you can to keep it that way. Maintain connections with your lenders and they may even be able to provide advice on how to best construct payment plans and effective ways to use credit lines, too.
A Credit to the Business
Having a high credit score for your business can open a lot of doors. Establishing the company and preparing it for the business world will put it on the economic map, but it’s creating bank accounts and using lending APIs to facilitate lending that really impacts credit ratings. After building it up, take care to keep it at that high level so when the business is a success, you can be the one that gets all the credit!
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