Strong business credit scores can be key to getting a company approved for trade credit and financing. But they can be very different than personal credit scores. Understand how they work and how to build strong business credit with a free Nav account: Get Started! Click Here!
What is a Business Credit Score?
Personal credit scores rank creditworthiness of individuals, business credit scores do the same for businesses. Personal credit scores range from 300 to 850. Business credit scores range from 0 to 100. Major business credit reporting agencies Dun & Bradstreet, Experian, and Equifax produce business credit scores and reports. FICO scores for small businesses are known as “FICO SBSS.”
Factors that determine business credit scores:
The following factors may be used to calculate business credit scores. Each scoring model is different, though, so some of these factors may not carry much weight, or may not be used at all.
- Payment history
- Age of credit history
- Debt and debt usage
- Industry risk
- Company size
By far, the most important factor when it comes to business credit scores is payment history: does your business pay its bills on time? Some credit scores are almost exclusively calculated based on payment history.
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Showing posts with label business credit building. Show all posts
Showing posts with label business credit building. Show all posts
Tuesday, March 16, 2021
Wednesday, October 17, 2018
Commercial Business Line of Credit!
A commercial business line of credit also known as an operating loan is a pre-approved amount of funds issued by a bank that your business can access at any time. Collateral is not usually required unless your business has poor credit ratings. If that is the case than be prepared to provide collateral or a personal guarantee. The amount you qualify for is based on your company’s cash flow and credit ratings.
Whereas a secured line of credit requires collateral this type of credit line is based on the creditworthiness of your company. Before you apply, check your business credit ratings with all three major bureaus. Your company’s creditworthiness indicates your ability to meet and honor financial obligations, both today and in the future. Since a lender will review your company’s credit history, revenues, and bank references you will want to be fully prepared prior to applying. Having a commercial line of credit protects your company against the unexpected because the funds can be accessed whenever needed.
This is more convenient then having to apply for a loan which takes time or applying for a cash advance against your receivables. A commercial line of credit can be used for: Purchasing new equipment Building renovations Business expenses Upgrading equipment Improving cash flow This can be an invaluable tool for financing your short-term capital needs. Your business can borrow, repay and re-borrow up to the approved credit limit with flexible repayment terms.
You will no longer need to apply for a loan every time you need to raise funds. It also eliminates the risk of over borrowing since the money you access from your credit line would only be the amount that you actually need. Before you decide to open a line of credit take the time to learn all the types of credit lines that are available. Whether you have less than perfect credit, a seasonal business, collateral, or strong financials, there may be a specific type of credit line that is better suited to fit your needs and that of your business.
Whereas a secured line of credit requires collateral this type of credit line is based on the creditworthiness of your company. Before you apply, check your business credit ratings with all three major bureaus. Your company’s creditworthiness indicates your ability to meet and honor financial obligations, both today and in the future. Since a lender will review your company’s credit history, revenues, and bank references you will want to be fully prepared prior to applying. Having a commercial line of credit protects your company against the unexpected because the funds can be accessed whenever needed.
This is more convenient then having to apply for a loan which takes time or applying for a cash advance against your receivables. A commercial line of credit can be used for: Purchasing new equipment Building renovations Business expenses Upgrading equipment Improving cash flow This can be an invaluable tool for financing your short-term capital needs. Your business can borrow, repay and re-borrow up to the approved credit limit with flexible repayment terms.
You will no longer need to apply for a loan every time you need to raise funds. It also eliminates the risk of over borrowing since the money you access from your credit line would only be the amount that you actually need. Before you decide to open a line of credit take the time to learn all the types of credit lines that are available. Whether you have less than perfect credit, a seasonal business, collateral, or strong financials, there may be a specific type of credit line that is better suited to fit your needs and that of your business.
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