4 Ways to Work on Your Business Credit in 2022

4 Ways to Work on Your Business Credit in 2022

4 Ways to Work on Your Business Credit in 2022

You have big goals for your company in 2022. Growth, higher profits, and a better online presence might be at the top of your list. However, if building your business credit isn’t part of your plan, you may be overlooking an important milestone.

Your business’ credit can play a significant role in the long-term success of your company. If you’ve ignored this fact for a while, you’re not alone. Business owners are notoriously busy. Building positive business credit is one of those tasks that tend to get put off for later.

Yet for the sake of your business, and even for the sake of protecting your personal credit, it’s time to stop procrastinating. Here are four smart tips to help you work on your business credit in 2022.

4 Ways to Work on Your Business Credit

1. Dot Your I’s and Cross Your T’s

Before you begin checking your commercial credit reports or trying to establish credit in your company’s name, it’s a good idea to make sure that your business is set up correctly. In addition to profits and cash flow, a properly set up business is a crucial part of becoming credible in the eyes of lenders, vendors, and service providers.

If your business has been up and running for a while, you’ve probably already completed some of these key initial steps. For the rest, consider making yourself a to-do list. You might aim to complete at least one of the following tasks each week.  

  • Incorporate or form an LLC with your state.
  • Apply for an Employer Identification Number (aka an EIN) from the IRS.
  • Open a business bank account in the company’s complete legal name (as it was filed with the state and IRS). Use the account regularly to pay bills.
  • Set up a dedicated business phone line in your company’s name. Make sure the number is listed in the directory.
  • Get a DUNS number.

Once you’ve completed the initial steps above, keep going and consider adding a few additional tasks to your to-do list as well. Here’s a 14-point checklist to make sure your business is legit.

2. Check Your Commercial Credit Reports Frequently

Just like your personal credit reports matter when you apply for a loan or credit card account, your commercial credit reports (Dun & Bradstreet, Experian, and Equifax) are likely to be considered when you apply for financing or services for your company.

For this reason, it’s a good idea to create the habit of checking your commercial credit reports often, preferably on a monthly basis. Credit reporting errors happen. When they do, those mistakes can potentially harm your commercial credit reports and scores.

It’s up to you to monitor your business’ credit reports and make sure that the information contained there is accurate. If you discover incorrect information on your business’ reports, you can and should take action. Learn more about how to dispute credit reporting errors with the commercial credit bureaus here:

Don’t forget, you can check your business credit data for free at Nav.

3. Establish Vendor Accounts and Open a Business Credit Card

Building strong business credit begins with establishing positive tradelines on your commercial credit reports. A few vendor accounts with net-30 terms can be a smart place to start if you do not already have established credit in your business’ name.

Remember, before you open an account you should ask the vendor whether they report to the commercial credit bureaus. You can also check out these three vendor accounts which could help you establish some credit for your company.

Another way to potentially build commercial credit is to open a business credit card in your company’s name. Keep in mind that, although you may be applying for credit in your company’s name, you’ll most likely be required to provide a personal guarantee to secure the new account.

Worried about qualifying? Find out which requirements you will likely need to meet here, before you apply.

4. Understand How Commercial Credit Scores Are Calculated

Of course, simply opening a new vendor account or business credit card alone isn’t enough to build great business credit scores. You will need manage your new accounts properly or they could backfire and hurt your business credit scores instead of helping them.

Each commercial credit bureau has its own method of credit reporting and scoring. As a result, there is no clear-cut answer to the question “How are business credit scores calculated?”

Nonetheless, there is some key information which is typically important. Here are some of the factors which are often considered when your business credit scores are calculated.

  • Payment History
  • Length of Credit History
  • Outstanding Debts
  • Public Records
  • Credit Utilization Ratio
  • Industry Risk

Want to dive deeper? Learn more about business credit reports and scores in this informative article from Nav.  

Strong business credit can be essential to the growth and long-term health of your business. It can give you an edge which your competitors might lack. Make a concentrated effort to follow to steps above, and you could set your business up for more success in 2022 and the years to come.

This article was originally written on January 6, 2020 and updated on January 3, 2022.

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2 responses to “4 Ways to Work on Your Business Credit in 2022

  1. According to the rep at Dun and Bradstreet, paying with credit cards for supplies or products to resell do not help your creditworthiness. The most important thing, according to her, was to set up accounts with your suppliers where they give you credit.

    I know, because we have over $750k in credit through Chase and Capital One credit cards and lines of credit, yet our report on DB (as well as Experian and Equifax) was woefully out of date and reflected terrible credit risk, even though we pay off our credit cards on a continual basis as we have for the past 4 years.

    Further, DB wanted us to pay thousands of dollars to rectify our credit report. With payment, they would then “allow” us to submit P/L reports, balance sheets, proof of ongoing business with our credit card companies, etc. I tried doing that previously and the info was rejected.

  2. Thanks for a very informative explanation, as well detailed avenues that I definitely will be able to use for my personal adventure of my own… Great insight simplified*****