Here's How to Build Business Credit with a Credit Card
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Having strong business credit is important; without good credit, it's difficult to get commercial funding, purchase vehicles and equipment, even qualify for a lease on office space. You, therefore, need to find ways to start building that business credit now. One of the most effective: getting a business credit card.
Business credit card companies report to the credit bureaus; because they do this, you can start building credit. Where many small businesses make a mistake, especially when first starting out, is that they work with vendors and suppliers who don't necessarily report to a credit agency. So you may be making all of your payments on time and in full, but ultimately you're not doing anything to build business credit. A business credit card, on the other hand, is guaranteed to help you start building credit.
When to Use Your Business Credit Card
As you work to build your company's credit, you want to utilize your credit card often. Of course, make sure that you have the money to pay the bill at the end of the cycle. This is key. Paying off your business credit card every month and staying on top of any fees will enable you to work on bringing your score up. If you fall behind, not only do you damage that credit score, but now you're incurring interest and late fees. So what may have been a five hundred dollar purchase, becomes much more expensive?
Staying on Top of Your Business Credit
Once you do get a business card and consequently start building your credit, you must stay on top of your credit report. The credit agencies are not infallible—they do make mistakes from time to time. Checking your business credit report regularly will enable you to catch any errors and thus correct any inaccuracies that you do come across.
Remember, having a strong business credit can help open several doors for your company. From being able to qualify for a loan with more favorable terms to strengthening your relationships with relevant vendors, your business credit is an important part of your company's overall profile.