Everything You Need to Know About Business Credit Scores
Most business owners know the ins and outs of running their business. There are many different moving parts involved, from running your daily operations to managing your staff of employees. However, many business owners don’t know about business credit scores, which are an important aspect of running a business. If you aren’t aware of business credit scores, here’s everything you need to know.
What it Is
Your business credit score is made up of a number of different factors, including the overall cash flow of your business, the type of business you run and your payment history. Similar to your personal credit score, your business score helps financial institutions evaluate your overall risk when determining whether or not to extend you credit when you need it. Other companies, such as insurance companies, also look at your business credit score when evaluating your risk tolerance. Like your personal credit score, your business may even have several credit scores that can vary slightly.
How to Find It
With your personal credit score, you can check on it regularly for free without incurring any penalties. Most major credit card companies now offer the option for you to check your credit score each month so you can monitor its activity. However, your business credit score is different from your personal score in that you aren’t guaranteed to be given free access to your report each month. If you want to regularly monitor your business credit score, you’ll likely need to pay for access from a third-party. If you don’t want to pay for regular access, you should still periodically review your score to ensure that everything is in good standing. If you notice any discrepancies, you should file a dispute as soon as possible to avoid having a negative item on your score.
How to Keep it in Good Standing
As with any credit score, you should strive to keep it in good standing if you want to be extended credit if your business has a future need. To do that, you should be prepared to keep your finances in order. That means that you should try to keep your payments in good standing and avoid paying your bills late. You should also have a good handle on your overall cash flow so that your checking account doesn’t go in the negative.
It’s not too difficult to understand a business credit score and how it affects your operations. If you can get a good handle on your business credit score, you should have no problems with growing your business.
