Tips on managing your business credit score

Even though lenders are gradually easing restrictions, getting a loan for your business in this post-recession era can still be difficult.

Taking active interest in your company’s credit profile can make a huge difference when it comes time to apply for a loan, says Jeff Stibel, CEO of business data firm Dun & Bradstreet Inc.

These simple tips from industry professionals and corporate credit agencies can help:

Know your score: Similar to your personal FICO score, your business has a credit score and history of its own that affects its ability to, and the cost of, borrowing money. Companies like Dun & Bradstreet and Equifax monitor and track business credit. These firms consider many factors when calculating your score, including the amount of time you’ve been in business, your industry, the number of people you employ and your accounts payable. Checking these reports periodically will give you an idea of what a banker will say when you walk in for a loan.

Fix errors: Just like with your personal credit report, if there’s missing or incorrect information on your business report, you can ask the reporting agency to fix it.

Have a credit history: Having, using and managing credit, in the form of business credit cards or business loans, is the best way to build your company’s credit worthiness. Late or missed payments affect a business’ credit negatively in the same way it does your personal credit.

Separate business from personal: Keep your business and personal finances completely separate. You don’t want poor financial management from your personal life getting in the way of your company’s growth, or vise-versa.

Keep your personal finances in line: When you’re a small business owner, the way you manage your personal finances says a lot about how you manage your business finances. If your personal credit score is low, lenders will consider that when evaluating your business loan application.

Communicate with your vendors: Most vendors don’t report credit history to the reporting bureaus unless you specifically ask them to. Unlike personal debt, which is required by law to be reported to credit bureaus, business reporting is voluntary.

Know your financials: Knowing your company’s financial outlook can be the secret key to getting a loan. You’ll need to know past revenue and have future revenue projections as well as a firm understanding of your fixed and revolving costs.

And, if all else fails, you can also submit audited financial statements directly to the individual reporting firms in order to provide a more accurate picture of your ability to repay debt, Stibel says.

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