Most of us have heard of the term “credit score”, but did you know there are different credit ratings for personal and business?
In this post we’re going to be taking a brief look at “commercial credit scores”, discovering exactly what they are and how it can positively or negatively impact the ability of your business to get credit when required.
What Is a Commercial Credit Score?
Commercial credit scores are not all based around whether you have a history of paying off finance consistently and successfully. There are a number of things that can affect the overall score; either in a good way or otherwise.
Just like with your personal credit score, the things you do in business will either add to or subtract from your total score when it comes to commercial credit.
Your score is used by banks, finance companies and creditors to determine the likelihood of you repaying a business loan, making timely and regular payments on a business credit card, paying accounts and invoices when they’re due, and even utility companies may access your credit score to determine whether to hook up your electricity supply and so on.
Obviously the higher your commercial credit score is, the better chance you have of obtaining business finance when you need it, as well as negotiating payment terms with suppliers. Your score is something you always want to be mindful of and something that you and your business should always be nurturing.
How To Get (and Keep) a Good Commercial Credit Score
One of the best things any business can do to ensure their commercial credit score builds and remains healthy is to make a conscious effort to always pay your bills on or before the date they are due.
Even if you don’t have any credit cards or loans, pay your utility bills and your suppliers on time. This all boosts your credit score and will enable you to be able to get finance in the future if you need it.
It’ll also ensure that existing suppliers are happy to keep supplying you, as well as putting your business in good stead when you seek out new suppliers. It also gives you the scope to be able to negotiate accounts and payment terms with suppliers.
If you are planning to secure a business loan somewhere down the track, it can be a good idea to start off with a business credit card. You don’t even have to use the card that often, but if you make a few purchases on it over a period of months and prove that you always pay the minimum payment, or better yet, the full balance on time, this will vastly increase your chances of being approved for a sizeable business loan when you need it.
You’ll also want to keep your personal credit and business credit separate. Open any lines of credit in your business or company name, not your personal name.
You can access your commercial credit score at any time, so always monitor it and ensure it remains healthy.