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How to Maximize Credit Score to Unlock the Full Power of Your Business Credit

Are you using your business credit score to its fullest potential? Are you getting the full amount of funding available to you through the power of your business credit? Here’s how to maximize credit score and unlock the power of your business credit.

Your Business Credit Score Makes All the Difference

While it is possible to fund your business with your personal credit, it doesn’t make much sense. Honestly, not only does that limit the amount of business funding you can get, but it also puts your personal finances in jeopardy.

As a result, you need to know how to maximize credit score.  Then, you can scale more effectively and efficiently, without sacrificing your personal credit.

Establishing and Building Business Credit

Most business owners assume that you build credit for a business the same way you build consumer credit. It seems to make sense, so it’s no wonder this is such a common misconception. With consumer credit, you just get credit accounts.  Once you use them, your payment history is reported to the credit bureaus. That happens regardless of whether it is positive or negative.

Consequently, it builds passively on its own, whether you want it to or not. The same is not true of business credit.

When it comes to business credit, you have to be more intentional. This means creating a Fundable foundation, including applying for a D-U-N-S number and opening a separate business bank account, among other things.

Getting Initial Accounts Reporting

Not all business credit accounts report payment history. This is one of the major differences between business credit and personal credit. Of course, pretty much all consumer credit accounts report payment history. As we already said, you do not have to do anything to make that happen, it just does. In contrast, you may not have a business credit score even if you do all the work.

That’s because the accounts you have may not be reporting your on-time payments.

How to Maximize Credit Score: Working with a Business Credit Specialist

Truly, it’s not easy to find accounts that will approve you before your business credit score is established. Even harder than that is finding accounts that will report your positive payment history to the business credit bureaus.

There are essentially two options. The first is to just apply for credit accounts and hope you get approved. Then, hope they are reporting payments. You can monitor your business credit to see if the accounts report payments. If they do, that’s great. If not, you have to start over.

Complicating matters even further is that you need more than one or two accounts reporting initially to build a score strong enough for approval from other accounts. As you can imagine, this trial and error method can take an extremely long time.

Alternatively, you can enlist the help of a business credit specialist. This is someone who can help you find the right accounts.  Those vendors that will both approve you without a credit check and report on-time payments. .

These are typically net accounts. That means they have to be paid in full completely at the end of the net term, usually 30, 60, or 90 days.

How to Maximize Credit Score with the Business Credit Builder

Initial accounts are great, but you need more than just a few accounts to maximize credit score. Beyond that, you cannot just start applying for any and all accounts at random.  You’ll be denied more often than not.

This puts you in the same predicament described above. You can use trial and error until you get enough accounts reporting.  On the other hand, you can save yourself considerable time and frustration by utilizing the Credit Suite Business Credit Builder. Not only will you get step-by-step instructions for setting up your business to be Fundable, but you’ll know which lenders you qualify for at each step.  Better yet, you’ll have the confidence of knowing you are not wasting time with vendors that do not report.

How to Maximize Credit Score Using Personal Guarantees

If you get a credit account with a personal guarantee, you are responsible for repayment. This could mean a hard pull on your personal credit, which can lower your personal credit score. However, in theory, if your business has an account in its own name and it is set up to be a separate entity from you, the owner, it is responsible for its own debt.

Still, many companies require a personal guarantee from the business owner before extending business credit. This is especially true for small businesses. It only makes sense.  Data from the Bureau of Labor statistics states that 20% of new businesses fail within the first year, 45% within the first 5 years, and 65% in the first 10 years. In fact, only 25% of new businesses make it 15 years or more.

No one likes risk. That’s why businesses require a personal guarantee and why business owners don’t love to give one. Still, if you have true business credit that requires a personal guarantee, the good thing is that the business will have to pay first. You will be personally liable for anything that the business funds/ liquidation cannot cover, but you will not be first in line for all of it.

A Personal Guarantee can Accelerate Your Business Growth

A better option is to realize that if your business is small and  young, you are likely going to need a personal guarantee for much of the funding. Yet, you can work to reduce your liability in a number of ways. The first way to do that is to incorporate your business as a corporation, S-corp, or LLC. Your business attorney or accounting professional can help you with that.

Using personal guarantees when necessary will allow you to increase the number of business credit accounts you have in your portfolio. When your business credit score is maximized, lenders may be willing to reduce reliance on personal guarantees.

How to Maximize Credit Score by Improving Your Reports

This process is ongoing. You need to continually have your finger on the pulse of your business credit reports.  This will help you ensure nothing is holding it back.

Whatever improves one report, is most likely going  to improve your reports at the other two of the big 3 credit bureaus. Paying off accounts always pays dividends, as does avoiding bankruptcies. Of course, you should ALWAYS make payments consistently on-time.

It’s also important to monitor reports to ensure you can catch mistakes and get them corrected. You can do this through each agency directly, but with Credit Suite business credit monitoring you can monitor all three for a fraction of the cost.

Business Credit is Your Superpower

Well, maybe not superpower, but it is powerful. Similar to a muscle, you have to keep working to build it and keep it strong if you want to maximize the potential power it holds. The business credit specialists and products at Credit Suite can help you just that. Call today!

The post How to Maximize Credit Score to Unlock the Full Power of Your Business Credit appeared first on Credit Suite.

How to Use Strong Business Credit to Unlock the Power of Advanced Business Vendors

We always talk about building business credit, and how a strong business credit score can help you get funding for your business. It can help you fund your business without overloading your personal credit.  Also, it can help you reduce your need for a personal guarantee when you need business financing. Yet, there is one huge benefit to strong business credit that is rarely mentioned. That is access to advanced business vendors.

Advanced Business Vendors are One of the Real Benefits of Business Credit

There is a misconception among many business owners that are just starting to understand business credit.  It is that a good business credit score can help you get a business loan without a personal guarantee. However, the truth is, pretty much every small business loan from a traditional lender will require a personal guarantee.

That being the case, is it really necessary to build business credit? Wouldn’t it be better to work on personal credit so a lender will accept your personal guarantee? What is business credit good for if not to help you get a business loan?

What frustrates you the most about funding your business? Check out how our free guide can help.

First, it can help you get a business loan. If your personal credit isn’t great and you have good business credit, underwriters will see that as a positive. Also, good business credit can help reduce the reliance of lenders on a personal guarantee, even if it doesn’t go away completely.

But the real benefit of business credit is that it allows you to access advanced business vendors.

What are Advanced Business Vendors?

These are vendors that offer credit to businesses that have strong business credit, but they may not report your payments.  That means they don’t help build your business credit score. Still, they are pivotal to running a thriving business.

Unlocking access to these vendors is a little realized benefit of a strong business credit score. If you have access to credit with advanced vendors you can grow your business in ways you may have never imagined

For example, you can bid on the big project even if you don’t have the cash flow to buy the supplies. You can offer the latest new product despite not having cash flow to keep up with demand. Basically, it opens up a whole new world as far as what you can and cannot do in your business.

What Does This Look Like Practically?

It may be hard to wrap your mind around exactly what this looks like in real life.  Especially when you are just thinking about credit cards and business loans.  Some examples may help.

Example 1: Remodeling Contractor Needs Supplies Before Payment

Suppose a contractor is hired to remodel a kitchen. The supplies are going to cost money, but the client isn’t going to pay until the job is done. However, if the contractor has business credit with advanced vendors to purchase the supplies, he or she can still take the job.  They will pay suppliers when the customer pays.

Example 2: Restaurant Owner Must Keep Up With Customer Demand

A restaurant owner needs to keep up with customer demand. Dishwashers are not keeping up, and they need more utensils and serving dishes. A vendor account with a restaurant supplier makes this a non-issue.  Just purchase what you need now, and pay the next month when meeting the increased demand pays off.

Example 3: Music Teacher Needs to Provide Various Instruments to Beginner Students

A music teacher has a studio to offer lessons to children.  As beginners, many of them do not have an instrument at first,  They likely do not even know what they want to play.  Business credit accounts with instrument suppliers, as well as suppliers of those things needed to maintain instruments can help. They will allow the teacher to provide a number of various types of instruments for students to try.

Students may even purchase instruments from the school once they choose what they want to play. This may offer an incentive to choose lessons at that specific school, as parents will not be spending on an instrument that may or may not get played.

Each example shows how advanced business vendors can help a business grow in a way that would not be possible otherwise. Of course, business credit cards may work. However, with vendors you usually have net terms. That means you cannot carry a balance, which reduces the risk of racking up huge amounts of debt.  Accounts like this are the reason you work to build strong business credit.

What frustrates you the most about funding your business? Check out how our free guide can help.

How To Find Advanced Business Vendors

Not all suppliers will offer this type of credit. The ones that do don’t necessarily advertise it. You typically have to know to ask for it or develop a relationship with them first.  This can take a lot of time.

Luckily, you can speed up the process by working with someone who knows who these vendors are. You need someone who already has a relationship with the vendors.  They can help you find the ones that will work best with your business. Of course, whoever you are working with has to know and understand your business as well.  Then, they will  know which vendors you will qualify for advanced business credit with.

The Benefit of the Credit Suite Business Credit Builder

This is a little known benefit of the Credit Suite Business Credit Builder. You have access to the platform for 5 years!  So, after you work through the business credit building process, you still have access to our huge database of advanced business vendors.

Furthermore, we tell you just what is required to get approved with each one. Of course, there are too many vendors to list in one presentation.  Still, a little taste of what is available can help you see that advanced vendors are just what you need.

Then you can run your business the way you need to.

Access Hardware Supply

Access Hardware Supply is a leading wholesale distributor of products from the top names in door hardware and security technology.

Qualification requirements include:

  • Entity in good standing with Secretary of State
  • EIN
  • Business address- matching everywhere
  • D & B number
  • Business License- if applicable
  • Business Bank account
  • Bank reference
  • Trade references
  • A good Experian business credit score

There is no minimum time in business necessary, and terms are net 30, 60, or 90. You can apply online or on the phone.

Central Restaurant Products

Central Restaurant Products has beens selling pretty much anything needed for the food service industry since 1981.

Qualification requirements include:

  • Entity in good standing with Secretary of State
  • Business credit history
  • EIN
  • Business address- matching everywhere.
  • D&B number
  • Business License- if applicable
  • Business Bank account
  • Bank reference
  • Trade/credit references
  • At least 1 year in business
  • D&B paydex score of 80 or higher

Terms are Net 30.

Sherwin Williams

Sherwin Williams is a widely known provider of paint and coatings for over 150 years.

Qualification requirements include:

  • Entity in good standing with Secretary of State
  • EIN number with IRS
  • Business address- matching everywhere
  • D&B number
  • Business License- if applicable
  • Business Bank account
  • 3 Trade references

If there is not enough business credit history, a personal guarantee (PG) is required. You have to apply for the account in the store, and terms are net 20.

Personal Guarantee

Sherwin Williams is a great example of how business credit can help your business, and help you avoid a personal guarantee in some instances. If you give a personal guarantee, the account may show up on your personal credit report. However, without a personal guarantee, using your business information, that is likely not to be the case.

Remember, a personal guarantee isn’t a bad thing. In fact, it may be the only option you have to get the funding you need until you build strong business credit. At least, that is, if you have good personal credit and you want to avoid very high interest rates.

But not using a personal guarantee keeps your personal credit available for personal financial needs.

Trade References

You may also notice that each of these vendors requires trade references. A trade reference is a report that details the payment history between a company and a vendor. It can come verbally, in a letter, or on a business credit report. Vendors that do not report to the business credit reporting agencies may be willing to provide a trade reference.  As a result, they can still help you get funding.

What frustrates you the most about funding your business? Check out how our free guide can help.

Unlock the Power of Advanced Business Vendors

Access to advanced business vendors is a huge benefit of strong business credit. They offer funding to help you build and grow your business, without paying unnecessary interest. They also help you avoid the temptation of carrying a large balance unnecessarily.

Of course, you have to manage the vendors in your credit portfolio carefully. Be sure you can repay and do so on time. Even if they do not report positive payment history, they are likely to report negative payment history.  Plus, you want to keep a good relationship with them. Not to mention, if you do not pay responsibly, you will not be able to get good trade references from them.

Ready to get started business business credit and unlock the power of advanced business vendors?  Try a free consultation with a business credit specialist.

The post How to Use Strong Business Credit to Unlock the Power of Advanced Business Vendors appeared first on Credit Suite.