Business Credit Score - The 5 Commandments
One of the most significant factors creditors take into consideration while assessing
the creditworthiness of your company or business is your business credit score. And this is why it's of paramount importance that you understand the working of the same. Also make sure if your business has a positive business credit profile linked with Corporate Experian, Dunn and Bradstreet and Equifax Small Business. This is very important because your lender or creditor or even your supplier would like to pull your profile one or all the three business credit bureaus before granting your request. Also with this you will have a separate business credit report separated from your personal credit score.
So here are 5 simple ways to understand the underlying concept of establishing business credit:
Credit: The balance outstanding, payment habits, credit utilization and number of trade relationships and trend over time plays an important role in making up of your credit score.
Account Types: Your lines of credits, term loans, business leases, whether your company has a vendor credit, corporate credit cards and any letters of credit clearly reflects the way in which your company handles its finances.
Inquiries: Excessive inquires made on credit or its eligibility can have a negative effect on your strong business credit. So make sure you keep in bay the number of enquiries your business generates.
Public Records: Dollar amounts that are linked with liens, bankruptcy, judgments and recent filings and their frequencies will also have a severe impact on your business credit score.
Demographic Information: The numbers of years on the file, North American Industrial Classification Code, Industrial Classification Code and the size of the business have effect on scoring your business credit profile. This is because some businesses are classified as high risk, while others aren't.
It is also important to bear in mind that your scores will differ on each credit bureau and also on the kind of business activity you are involved with. Also the difference arises because, your creditors do not report to all the three bureaus. However as long as your payment habits are healthy and you make effective utilization of credit, you have nothing to worry about.
For instance, corporate Experian makes use of about 140 variables in its
business credit score evaluation process and if one of your suppliers, lenders or creditors report just to this agency, only the specific account will be displayed in the Experian file.
Although there is a difference in the scoring process, the above mentioned 5 factors are considered the important parameters in evaluating your
business credit score . Hence as long as you abide by the rules of these important principles and do what is right for your business, you can keep your scores at their best.
Also it's important that you do not neglect the importance of
business credit score. as they are the only parameter used to gauge the worth of your business anytime you are in need of financial assistance.
Business Credit Score - The 5 Commandments
By: Morton Sargent
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