Tips to Help Strengthen Your Business Credit & Borrowing Power

While many business owners stay on top of their personal credit scores, they often ignore their business credit, which can come back to haunt them in the event they need to secure financing for their business. It’s not always poor credit that prevents funding — it’s often times a lack of established business credit that causes the problems.

While you may not need financing at the moment, sometimes an opportunity to expand will present itself and you need to be prepared to move quickly. Having your business credit sorted will guarantee that you never miss out on an opportunity because you can’t secure the necessary funds.

There are several things you can do to help establish, build, and improve your business credit. Below are some easy to implement tips to help you improve your business credit.

  1. Establish your D-U-N-S number immediately.

Dun & Bradstreet established the D-U-N-S number almost 60 years ago, and it’s the identification that is linked to the credit file of a business. Here’s an explanation from their website:

The D-U-N-S Number is a unique nine-digit identifier for businesses. It is used to establish a Dun & Bradstreet business credit file, which is often referenced by lenders and potential business partners to help predict the reliability and/or financial stability of the company in question. If you want to bid on government proposals, you will need to get a D-U-N-S Number for each physical location of your business.

“The sooner you establish a D-U-N-S number, the quicker you can start to build your score. It’s free to have a profile created, and while they will try to upsell you different credit building packages, you do not need to pay anything to have a number issued to your business,” advises David Sessford of Ready Steady Sell.

The D-U-N-S number is something all businesses, whether located in the UK or U.S. should secure if they don’t already have one. To see if your business has been issued one, you can check here.

  1. Open accounts with vendors and suppliers that report your payment history.

One of the quickest way to build your business credit score is by having positive payment history report to your D-U-N-S number. Not all accounts will report, however, so sometimes it’s a good idea to open accounts that you know will report monthly.

“Unfortunately, a lot of your normal business expenses will not report, so it’s a good idea to seek out some vendors that do report, and open an account with them,” says Chris Dziak, CEO of Pure Nootropics. “A lot of office supply vendors report, so locate one that does and take an occasional purchase with them to keep that positive reporting hitting your file on a regular basis.”

Corporate fuel cards are also a good source of reporting, as most fleet accounts will report to D-U-N-S. Even if you just use it to fuel one vehicle, the reporting is worth it.

  1. Maintain low utilization on your credit cards.

When the balance reported on your credit cards each month is high, related to the limit of the card, it will actually lower your score. The best way to avoid this is to use the cards that report sparingly, and funnel all business expenses through cards that do not report. If you have a business phone, or other recurring payments, set these up on auto bill through your bank. It’s free to do, and like when I wanted to sell my iPhone 6, it’s pretty easy.

“If a card reports to D-U-N-S, use it each month to keep it active, but maintain as close to a zero balance as possible,” explains Brad Rafferty of Wabash Power. “The cards that do not report your history are the ones you should keep a balance on if you aren’t able to pay it off each month. This helps you always maintain the highest possible credit score.”

Keep in mind that those cards that don’t report to D-U-N-S might report to your personal credit instead, so high utilization on them could impact your personal score. The best option is to always pay off your cards monthly, but if that’s not possible be aware of what cards report and to where.

  1. Negotiate deletions to remove any negative history.

If you have some negative credit from the past haunting you, it is possible to get it cleared from your report.

“Creditors want to be paid, plain and simple,” says Michael Plaza, CEO of Compare the Financial Markets. If you have negative reporting hurting your score, contact the creditors directly and offer to settle the debt in exchange of them removing the negative history from your credit. You can typically also settle for a fraction of the original debt amount, so start the negotiations low.”

There are plenty of templates that can be found online to help you craft a pay-for-delete offer letter. It’s always a good idea to send all communication certified mail in order to maintain a paper trail of all discussions during the negotiation process.