Good credit ratings are important in every aspect of life. A good credit score will prove how likely you are to repay any debts that you may accrue during your life. It will also allow individuals to obtain a credit card or loan. Credit scores can even help someone to negotiate a lower interest rate.
Businesses face a similar process and pressure from their business’s credit rating. However, there are different algorithms that come into play when determining a business’ credit score. Similar to an individual’s credit score, if a company has a good credit rating, it can provide them with good benefits. This may include avoiding prepayment for materials and services. A good credit rating may even place the business in a better position to negotiate with suppliers or qualify a business for better interest rates and credit terms. Continue reading to discover how to build a strong business credit rating. If you require assistance, do not hesitate to reach out to our experienced accounting firm. If you need quality assistance with accounting, tax, or consulting services, contact Werdann DeVito LLC today.
How to Build a Strong Business Credit Rating
A business can establish a good credit rating by taking the following steps:
- Establish a business phone number and have it listed in directory assistance.
- Obtain an employer identification number or EIN for tax reporting purposes.
- For any credit situation, it is important to pay your bills on time, all the time. Late payment history will bring down your credit rating and could negatively impact your business credit profile.
- Separate business and personal expenses by opening credit cards, lines of credit, and bank accounts in your businesses’ legal name. This will also make managing taxes easier.
- Form a corporation or LLC which will separate your business and personal credit profiles and financials. Without doing this, your business and personal credit history will be legally attached and your personal assets could be at risk if you are ever sued.
- Secure payment terms like net-60 or net-90 with a couple of vendors or suppliers that report those payments to business credit reporting agencies. This will establish a positive business credit history.
- Keep track of your credit to avoid having errors show up on your credit reports. This can be done by monitoring your business credit history and keep an eye out for items that aren’t accurate. File a dispute with the reporting agency if you find an error.
Contact our experienced New Jersey firm
Werdann DeVito LLC is an experienced Certified Public Accountant firm serving clients throughout New Jersey with all of their financial needs. If you need quality assistance with accounting, tax, or consulting services, contact Werdann DeVito LLC today.