Starting and growing a business line of credit can be extremely difficult. The whole process is even more difficult in a stagnated economy. This is especially true when you are already utilizing a line of credit to establish your business. Unfortunately, for most startups there really is no way around using a line of credit to get established, but that doesn’t have to be the end of your Credit Profile. There are tons of strategic ways that you can build your business’ credit profile.
Open Utility Accounts In Your Businesses Name
Are you operating a small business out of your home or garage? If so, you probably have your utilities and mortgage registered in your name. Well, when you prove to lenders that you can pay creditors on time, you are seen in better lights. Switch your utility accounts and mortgage over to your businesses’ name. In some situations you might even have to pay a small security deposit, but it will be worth it in the long run. Sure, paying electricity bills and phones bills won’t end up on your credit record, but it will show that you are capable of paying your debts on time.
Consider Supplier Credit
Do you have several different suppliers that you work with on a weekly or daily basis? Well, you might be surprised to learn that many supplier offer lines of credit that are somewhat similar to that of a bank. While many of these companies will only offer you a line of credit for 30 to 60 days, the Better Credit Blog suggests that this can go a long way when it comes to building credit. In addition to this, the more payments that you make on time, the more your credit limit will increase.
Hit Up The Banks
Most small business owners will apply for business credit cards when they are trying to build their line of credit. Sure, there is nothing wrong with this, but you do have other options available to you. Applying for a line of credit or a small bank loan and paying it back in a timely manner will go an extremely long way. Even if you do not need to credit or loan, you should still take this approach, as it can help you build your credit profile much faster. Always consider going to the same bank, where you have opened your checking account. Remember, you already have an established history there.
Pay Down Balances Quickly
You probably already know that high credit balances can affect your personal credit score. Well, they can negatively impact your business credit score as well. This is why you need to make sure that you are paying down your balances as quickly as possible and don’t let them build up. A good rule of thumb is always to make sure that your balances are at least one-third or less ratio of debt to available credit.
Immediately after establishing your business, you should register it with a company that keeps profiles on businesses from all around the world. These companies can issue you a business profile and an identification number that you can post at the physical location of your business. This will start your credit profile, and banks or lenders can reference this number in the future to check your creditworthiness.
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