In most cases, business credit reports are prepared by credit reporting agencies when credit is granted to an individual or company. These reports can be analyzed at any time during the selection process of when to grant credit for a business. However, business credit history does not always mean that the business has excellent credit. This is because business credit is one of the most important areas to manage as well as track.
Business credit terms are determined based on many factors including the type of financing offered for a business, potential revenue, and the history of payment. While it may be easy to assume that a business has no need of borrowing money, a good business credit may be necessary to obtain the financing you need to keep your business growing and operating. There are several financing options available to businesses, but if your business is planning on using credit cards, financing through business credit cards can be extremely helpful.
Commercial credit ratings and reports are required for all businesses wishing to obtain financing from the Small Business Administration or SBA. When a business applies for financial assistance through the SBA, business credit scores will be used along with other criteria in determining the funding eligibility of the business. While some small business credit ratings and reports are more subjective in nature than others, all Business Credit scores are required to meet the federal government’s standards for determining eligibility for SBA loans and grants. Whether you are a new business or an established business looking to enhance your credit scores, keeping your business finances separate from your own personal finances can help to ensure that you do not suffer any financial hardship in the future.
As part of your business credit profile, each and every line of credit you take out is required to be reported. Credit inquiries are not included in this report. A separate legal entity is required when you apply for loans from the Small Business Administration. Your business credit profile consists of your employer identification number, your tax identification number, your business’s social security number, and your individual private employment identification number.
Another way that business owners can improve their bad business credit rating is by obtaining a free Navigator account. The free Navigator account gives business owners access to multiple online banking services. You will need to create your account by providing your social security number, your employer identification number, and your private employment identification number. If you have previously used the Internet to make a purchase, you may want to review the information on the website to see if you were able to secure a good business credit rating. While there are a number of different websites that allow you to borrow money, it is always a good idea to research the lending terms carefully to make sure that you will not be penalized for a borrowing problem in the future.
Many of the same business credit reporting agencies offer online calculators that will help you compare business credit scores from various credit reporting agencies at once. You can view your information in a table format so that you can compare reports from all the different agencies at once. To get started, fill in your contact information including your name, address, and your employer identification number. Once this information has been submitted, you will immediately receive a business credit score from each of the three main credit reporting agencies.
As business owners, you want to keep track of your credit scores so that you can understand where you currently stand. You want to keep in mind that having a good credit score does not necessarily mean that you are a low risk borrower. Businesses often make mistakes when borrowing money or spending money. It is important to understand business credit scores so that you can learn if you should borrow money from a new customer or if you should wait to obtain new credit from an existing customer.
Business credit scores are important because they influence the interest rates that you will be offered for loans and other financial obligations. Understanding how to obtain credit scores from reporting agencies, understanding what those scores mean, and maintaining a good credit score are important elements for small business financing companies. Business owners can also use a credit score to secure financing from banks and other lending institutions.
