A Few Quick Tips on Building Business Credit

A good business credit score is a key tool for building your small business. In addition to proving that you're handling your company's finances responsibly, a positive credit rating may help you get lower interest rates on business financing and better terms with your product/service suppliers. Down the road, your business credit history can also serve as a positive "financial snapshot" of your company for potential business partners or buyers.

Here's what new business owners should know: Personal credit scores generally range from 350-850, but business credit runs on a 0-100 scale. The higher your score, the better. The main three agencies that report business credit are Dun & Bradstreet, Experian, and Equifax. And although it can take a little time to establish credit for your new business, it's actually relatively simple to do so.

• Create a "track record." Potential creditors want reassurance that your company is legitimate and trustworthy, especially if you're a young business owner, says Ty Crandall, author of Business Credit Decoded. Maintaininga professional image helps, and that can include basics such as having a good-quality website and a professional e-mail address (not "Soccerfan21@gmail.com). Even more important: If you have an outside office, list your company's name-;rather than your personal name-;on your lease and utility bills. Those payments may be reported to the credit-reporting agencies and are a simple way to begin establishing your company's credit track record. 

• Get a D-U-N-S® number. This nine-digit number uniquely identifies your business with Dun & Bradstreet, the largest business credit-reporting agency. It's similar to how a Social Security number identifies an individual to the personal credit reporting agencies, Crandall explains. You can apply for a free D-U-N-S number at Dun & Bradstreet Credibility Corp. (dandb.com), then use it whenever you apply for business credit. Some organizations, including government agencies, require a D-U-N-S number before they will work with you. Also good to know: "Businesses are often pushed to buy extra services along with their D-U-N-S, but you can get the number alone at no charge," Crandall says. 

• Charge it. Small business owners should always separate business and personal expenses for tax and record-keeping purposes, according to Brian Ward, senior director for business information services at Experian. A smart way to do that--and build your business credit at the same time-;is to open a credit card in your company's name and use it only for business expenses. As you make consistent payments, your card issuer will report that information to the credit bureaus. Over time, that data can have a positive impact on your business credit score.

• Open credit lines with vendors. Future lenders want to see that you've handled past financial obligations responsibly, says Ward. A way to prove that is to open credit lines with suppliers (from office supply stores to delivery companies) who will extend you a small amount of starting credit and will agree to report your payment history to the credit reporting agencies. "Many vendors don't report accounts to the credit bureaus, so it's important to request that they do so," Ward says. Make your payments on schedule or even early to boost your business credit rating. Over time, you may prove your business worthy of larger credit lines and loans from both vendors and financial institutions.