It can be exciting to get your business off the ground and running. To get going, you may require business loans to purchase your office equipment and furniture and initial inventory or to increase working capital. However, you may be in a dilemma when you first start out since your business may not have a high credit score. When it comes to building up good credit, it can take patience and time. Here are some tips to get you started.
Outline Necessities Vs. Wants
You may want to lease a large office space and outfit it with fancy furniture and decorations. However, you can often get by without these things at first. Is your business currently running out of your home? If so, then you may want to keep it there for the time being while you build up your credit score. There will always be time to expand later, but you should stick to the necessities that will help you lower your overhead.
Open up a Line of Credit
Lenders won't lend to you unless you can prove to them that you have a good credit score. So now's the time to open up a credit card for your business.
Business credit scores are a little more complicated than personal credit scores collected by Equifax or Experian. Rules set by Fair Isaac Corporation (FICO) use "predictive analytics." In other words, their credit bureau calculates your score on what's likely to happen to your company based on trends. They collect information like your debt, payment history with vendors, the age of your credit line, and so on.
A credit score of about 700 is considered to be good. So how can you increase your score with this new line of credit? The number one rule is to pay debts on time. If you have revolving credit, keep your balances low. It may be tempting to open many credit cards to try and increase your total credit line, but this can possibly increase your debts. Focus on just a couple of cards if you can.
Be Diligent
Thankfully it doesn't hurt your credit rating to check your score on reports. In fact, it's recommended that you do this to look for any mistakes, such as identity theft, errors made by the reporting company, employee fraud, and old information. Besides being diligent about checking your reports, develop a good rapport with your vendors. If you have good communication lines with your vendors, they will be more likely to stay on top of reporting your payments.
Although it can take a little time to get your business to where you want it, being patient and following these tips can help with your credit. Contact a loans and financing professional for more information.
Share22 June 2018
When I began my first business selling sports equipment locally, I knew the sports-world well, and I knew how to run a business. One thing I did not know a lot about was the financial world. I had never applied for a loan in my life other than when I financed my car with the dealership in-house financing. My first application at a large bank was denied. I began looking into my other options, and I found that there were more lenders for new businesses than I realized. I applied at local credit unions, local banks, and other business lending services. I was able to secure more funding than I even expected, and my credit is just average. I created this blog to help other new business owners realize that there is funding out there. You just have to find it and apply! Don't give up on your dream.