How To Build A Business Credit Score For A New Business?

If you’re starting a new business, a good credit score is crucial to gain market credibility. You need to attract lenders and investors to grow your business, and they check on your business credit report to express their interest in working with you.
It’s necessary to maintain an impactful credit report for a business; however, it is wise to know how to build a business credit score for a new business. It helps you gain financial stability to make your business successful.

Business Credit Score

Just as you maintain a good personal credit score to avail of loan offers, you should build a business credit score to maintain a rapport with your investors. Your business credit score is built on its financial history: it includes the payment history of your business credit card and other lines of credit. It also includes loans undertaken by your business and their length of payment history.

If you’ve got a business set up in India, a good business credit score ranges between 300 and 900. To maintain that, you need some expert guidance to help you quickly build an attractive credit report for your business. If you already maintain a business credit score, you can regularly check your credit information report and the company’s credit score on CreditQ.

Developing a good business score takes time and helps in getting you a loan to speed up your business growth. Here’s how you can build a business credit score from scratch.

Open a Business Bank Account

If you’re planning a startup anytime soon, the first thing to do is to open a current business account. It should be in the name of your business. You must pay heed to carry out all your business transactions through this account only. Make business purchases using this account as it will help you score well. Similarly, you should pay your EMIs timely to maintain a good score. Lenders lookout for businesses that are disciplined and punctual when it comes to their financial dealings.

Keep Your Personal and Professional Transactions Separate

If you try to misuse your business credit card by making personal purchases, your lenders may not find it suitable to join hands with you. The reason is, they would acknowledge you as not serious about your business, and you may lose out on a good business opportunity. That’s why your personal credit score should not impact your business credit report.

Have a Separate Business Address

Credit agencies may track your business credit report and find it suitable to work with you only if you understand genuine business ethics. It includes having a separate business address and not printing your home address to attract buyers. It can backfire as your business will have no credibility as a separate entity that can run on its own.

Avoid Borrowing Unnecessary Funds

While you want to grow your business instantly, it’s good to have patience as things roll out for you. While borrowing money or availing of loans, you should set a limit as to how much credit is enough for you at this point in time. Some new businesses make the mistake of borrowing more than required and end up repaying a huge amount without making any profit. Be a smart player and let your business grow with time.

Apart from these tips, you can also list out your business defaulters in case you’ve achieved a small mark in your business. There may be vendors troubling you with payments. You can report those business defaulters at any leading credit report bureau, and you can get help in the payment settlement process.

CreditQ helps you check your business credit score and advice on maintaining a good credit business information report.

Leave a Comment