If you own a business, it’s important to make sure that your business has credit as well. You want to build up business credit separately from your personal credit. This is important if you want to be able to get bigger business loans down the road for expansion, or for other necessities.
Here are 3 tips that can help you as you build business credit:
1. Get a Business Credit Card
One of the best ways to build credit is to use a business credit card. You will need to make sure that you have a registered business name. This way, you can make sure that the card is attached to your business, and not to your personal credit. If you want to build business credit, you need to make sure that you and your business are two separate entities. Make sure you find out what is necessary to register a business in your province. Then, get a credit card in the name of your business and start using it and paying on it regularly.
Regular use, and regular, on time payments, with your business credit card will help you build good credit rather quickly. Make sure, though, that you are keeping business and personal expenses separate.
2. Let the Credit Bureaus Know
There are credit bureaus that specialize in business credit. You should register with these bureaus so that they can start tracking your business credit performance. Dun and Bradstreet has a Canadian credit bureau, D&B Canada, which will can report on business credit. Equifax Canada also has a business credit report division that you can register with. Other options include Mercantile Credit Bureau and Groupecho Canada Inc. You need to let business credit bureaus know you are open for business so that they can collect information on you, compiling a credit report.
3. Ask Your Creditors to Report to the Bureaus
Of course, you won’t have a business credit history if no one reports it. You can ask your business creditors to report to the business credit bureaus. Or, you can start out by asking your credit card issuer where it will be reporting your payment information. Then, when you buy things on credit from suppliers, or get a small loan from a bank, you can tell the lender to report your payment history to the credit bureaus. This is a good way to begin building your credit report as a business.
Remember, though, that you have to follow good habits if you want to find success with your business credit. You have to pay on time, and pay the full amount owed. Just as with personal credit cards and debt, you need to show your high level of financial responsibility. Otherwise, your business credit will be ruined, and you’ll be in a worse place, financially.