How to Build Your Business Credit Rating

Just like a person, a business is considered to be an entity with a credit rating. Your business credit score will be used by lenders to help them figure out whether your business is trustworthy and whether it will pay its bills on time. Your business credit score is important because it helps the companies that you deal with figure out whether they are likely to be a credit risk. Your credit score is based on a complex statistical model which helps companies to predict whether you are a credit risk or not. This model looks at how long your company has existed, how much credit it has already taken out, how much of the available credit is in use, whether you are paying your bills on time, and whether you are paying the minimum amount, or more than that, off your bills each month. Credit scoring for businesses works in much the same way as credit scoring for a person, and the same sort of rules apply. When you are a new entity, you should look for smaller lines of credit - low risk things like a phone bill or a credit card with a small credit limit on it. As you become more established you will be able to work towards bigger lines of credit, until you have a strong history and a good reputation. If you feel like you have been trading for a while but you don't have a good history yet, then you should check your business credit rating with Experian or one of the other major credit reference agencies. Your report will show what the agency holds on you - it could be that there is out of date information on there, or that the companies you have been working with to build up a credit rating have not been reporting to the credit reference bureau. This is a great resource to learn more about how to build business credit Building up a business credit rating takes time. It is important that you are consistent in your applications, and that you apply only for credit that you know you can afford. With your first few applications, lenders or creditors may ask that you provide them with some sort of proof of income so that they can see what they are dealing with. Having good records will make this easier.


If there is a specific company that you want to build up a line of credit with, talk to them about perhaps opening a small, low risk account to begin with and building up your reputation that way.