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Build and Establish a Better Business Credit Score

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Build and Establish a Better Business Credit Score

To be successful in business, it’s important to have a good credit score. A strong credit score can help you get loans and funding when needed and establish trust with potential partners and customers.

If you are having financial troubles in your company right now and still can’t get a grasp of your business credit score, don’t worry because that is what our team at FShad CPA is here for. We understand that building a good business credit score reputation is not easy for business owners. That’s why our accountants provide accounting services to various businesses, SMEs, and personal finances.

What is Business Credit?

Just like your personal credit score, a business credit score is a business financial instrument used to determine the current financial health status of the business. This is what investors, business owners, and big companies will look into to assess your credibility regarding repaying funds and sustaining a good financial reputation. Credit bureaus will be computing your credit score based on their algorithms. The credit score usually ranges from 0 to 100, and attaining a credit score of 80 is the ideal status that you can achieve. But certainly, getting an 80 and above is not an easy task at all. You have to put extra effort and stable financial status to get to that point.

Is building a better credit score important? The simplest answer is YES!

  • Building a well-reputed business credit score will help you expand your business progressively and efficiently.
  • There are more opportunities for borrowing funds from lenders since they have seen your creditworthiness and your ability to pay your loans. The same goes with vendors or suppliers where you can apply for equipment financing and business leases.
  • Having a good business credit score will expose you to better financial loan terms, interest rates, and favorable business insurance.
  • Separating your business credit score from your personal credit score will minimize the risk of credit score failures on your personal finances especially when the business went bankrupt.

How to Establish a Company’s Credit Score?

If your business doesn’t have a good credit score, you can do a few things to improve it. Follow these tips to build and establish a better business credit score.

Establish a Fully Operational Business

If you are still in the early stage of your business or just starting up your firm, it is recommended to make the business fully operational in the most possible and quickest time. This is because fund managers, investors, and other business owners won’t look into your credit score unless you have established a fully operational business entity. What are the things you should do to establish a fully operational business?

  • Acquire your business’ official phone number and make sure to register it through your local phone directory.
  • Obtain also your business number for the CRA.
  • Create your website and open a bank account solely for your business. This bank account will serve as your legal way of paying your bills and separating personal finances

Create Positive Relationships with Business Suppliers and Vendors

When you are just starting your business, and you’re new in the industry, getting connections is not an easy task at all. Companies with good relationships with business suppliers are most likely to experience financial advantages when applying for loans and borrowing funds. Suppliers will feel entrusted to your way of payment even if there will be no advances to be made. Making connections with your suppliers who are doing credit score reporting to verified bureaus is also important to make sure that they are contributing to your credit score history.

On-Time Payment of Liabilities

This is the most difficult task in maintaining or achieving a good credit score. But, it is also considered the fastest way of achieving a higher business credit score. Paying your bills, loans, leases, and other liabilities on time and schedule is a varying factor that creditors and lenders will look forward to. This will determine if you are really capable of paying your obligations and dependable in managing your liabilities. So, to build a good business credit score, make sure to pay your bills on time or before the set deadline.

Establish a Corporation

Building your corporation will contribute to your credit score history. Aside from separating your personal credit history from your business credit history, establishing a corporation will expand your opportunities for faster and easy access to capital, lower tax rates, restricted debts, and many more.

Get Your Own Business Credit Card

This is also one way of managing your credit score. Getting a separate credit card for your business is a good practice in managing your finances. Getting a business credit card that typically reports to the verified credit bureaus in your locality is recommended. Make sure not to abuse your credit card limits, as it will also be a basis for computing your credit score. Additionally, how you use the money on your credit card will also affect your credit score.

Do Regular Monitoring of Your Credit Score

Monitoring your credit score regularly will prevent inaccuracies and discrepancies in your credit reports. In addition, if you can monitor your credit score regularly, you can address current problems and create resolutions as quickly as possible.

Work With an Accountant

To ensure that you are on the right track and are managing your credit scores well, it is an advantage for business owners to work with a certified public accountant. With their guide and financial advice, you can ensure economic growth in your business and a reputable and well-established credit score.

Are you ready to start your business credit score? Talk to our expert and licensed accountants at FShad CPA, the best and one of the top accounting firm services in Toronto. Whether you want to inquire about business credit scores, tax-related concerns, bookkeeping, or managing financial statements, our certified accountants are always ready to provide service to anyone. To learn about our accounting services, visit our website or contact our customer service hotline. We always have someone willing to assist your needs.

Insights about running a successful business.

Disclosure: This publication is produced by FShad CPA Professional Corporation as an information service to clients and friends of the firm, and is not intended to substitute for competent professional advice. No action should be initiated without consulting your professional advisors. Your use of this document is at your own risk.

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