Establishing business credit is a big deal, especially if you’re a small business owner. You want to make sure that your business is well-prepared for whatever the future might bring, and one way to do that is to establish your business credit score. 

The importance of establishing a good business credit score cannot be overstated. Your credit score can determine whether you can get the best loans and credit, which is important if you want to stay afloat in a competitive market.

What Is A Business Credit Score? Why Is It Important? 

A Business Credit Score is a rating that businesses get from credit agencies. It's similar to your personal credit score and can be used to determine your eligibility for loans and other credit-based products. 

A good business credit score is important for a few reasons. First and foremost, it can help you qualify for loans and other credit products. Second, a high business credit score helps you get favorable interest rates on loans and other credit products. And finally, having a strong business credit score can help your business get more business from potential customers.

How Can I Establish A Good Business Credit Score? 

There are a few key things you can do to establish your business credit score.  First, make sure that you pay your invoices on time. This will show creditors that you're responsible with your finances and that you're likely to repay any money you borrow.  Second, use a business credit card for your business expenses.

We have listed 7 key points to help you establish a good business credit score - 

1. Register Your Business 

Registering your business is the first step in building your business credit score. When you register your business, you provide the government with your business name, address, and contact information. This information is then used to create a business credit file, which is used by creditors to determine your creditworthiness.  Registering your business is a simple process that can be done online or in person at your local government office.

2. Get Your Business PAN Number 

A PAN number is your business identification number and helps credit bureaus identify your business. You can apply for a PAN number online or at your local government office.  Having a PAN number is important because it helps creditors verify your business identity and track your credit history.  It's also a good idea to get a PAN number if you plan on doing business with other businesses in India.

3. Open A Business Bank Account

Getting a business bank account for your new business is the first step in building your business credit score. Having a bank account shows that you're serious about your business and that you have the wherewithal to repay any money you borrow. It allows you to deposit money and make payments. It also gives you access to loans and other credit products. 

4. Always Borrow From Genuine Lenders

Loans and credit cards can be a great way to help you establish your business credit score, but you need to be sure that you're getting loans and cards from reputable sources. Only borrow from banks and companies that you know you can trust - banks and companies that are well-known and have a good reputation. This way, you can be sure that you're getting the best possible terms on your loan or credit card.

Here is a list of top business loans in the current market!

5. Build Assets Along With Your Business

A wise financial move is to put your earnings into prudent assets for the long term, such as owning stocks, bonds, mutual funds, or real estate. Attach your investments and savings to your business credit card, if you have one, or a brokerage account, and slowly but surely build assets to protect your business and your family.

6. Prudent Borrowing And Diligent Repayments

Always repay your loans and credit cards on time to help build your business credit score. Reputable lenders will reward you with good terms, and prudent borrowing will help you build long-term assets. Remember, a good credit score is vital to get the best credit for your business in the long run. 

7. Apply For A Business Credit Card

A business credit card is a great tool and convenient way to pay for things online. It also helps in building your credit.   By using a business credit card, you can easily keep track of your expenses and repay your debt in a timely fashion.  Find a good business credit card that has low interest rates, no annual fees, and flexible payment options, so that you can easily manage your finances.

Conclusion

Managing business finance is crucial for any budding entrepreneur. By following a few simple steps, you can ensure that your business finances are in good shape. By doing your homework and staying disciplined, you can build a strong business credit score and improve your chances of getting the best possible loans and credit products.

FAQs of 7 Simple Steps To Establish Your Business Credit Score:

1. How do I get a business credit card?

Once you have instated your business and have a business bank account, you can approach your bank for a business credit card. Check our CreditMantri website for the latest business credit cards in the market. 

2. What are the benefits of having a good business credit score?

  • Access to affordable credit
  • Place orders without any prepayment requirement
  • Better business terms with your vendors and suppliers
  • Get best-in-class business credit cards with great terms
  • A stable future for your business financials

3. What are some simple steps to building a good business credit score?

  • Monitor your business credit score regularly
  • Register your business and get a PAN card
  • Pay your bills on time and in full each month
  • Avoid late payments and defaults as much as possible
  • Open a business bank account and get a business credit card

4. What is considered an ideal business credit score? 

A score of 700 and above is considered ideal to get the best loans and credit cards. 

5. Is my personal credit score linked to my business credit score?

No, they are completely separate; they are based on your PAN card and hence the business credit score is completely independent from your personal credit score.