Building and maintaining good business credit is essential for any company that wants to access financing, negotiate favorable terms with vendors, and attract new customers. However, there are a number of common mistakes that businesses can make when managing their credit that can damage their creditworthiness and make it difficult to achieve their financial goals.
1. Not establishing business credit separate from personal credit.
One of the most important steps you can take to protect your business credit is to establish it as a separate entity from your personal credit. This means opening a business credit tradelines for cpn card and obtaining an Employer Identification Number (EIN) from the IRS. Once you have separate credit profiles, you can begin to build your business credit history.
2. Making late payments or missing payments altogether.
One of the biggest mistakes you can make with your business credit is to make late payments or miss payments altogether. This will damage your credit score and make it difficult to obtain financing in the future. It is important to set up a system for tracking your credit card bills and making payments on time each month.
3. Maxing out your credit cards.
Another mistake to avoid is maxing out your business credit cards. This will increase your credit utilization ratio, which is a major factor in your credit score. A high credit utilization ratio can make it appear that you are a risky borrower, which can damage your creditworthiness. It is important to keep your credit utilization ratio below 30%.
4. Not monitoring your credit reports.
It is important to monitor your business credit reports regularly to ensure that they are accurate and free of errors. You can obtain your business credit reports from the three major credit bureaus: Experian, Equifax, and TransUnion. You should review your credit reports for any errors or discrepancies and report them to the credit bureaus immediately.
5. Not disputing inaccurate information on your credit reports.
If you find any inaccurate information on your business credit reports, it is important to dispute it with the credit bureaus. You can do this by filing a dispute online or by mail. The credit bureaus will investigate your dispute and, if they find that the information is inaccurate, they will remove it from your credit reports.
6. Closing old credit card accounts too soon.
The length of your credit history is a factor in your credit score. This means that it is generally a good idea to keep old credit card accounts open, even if you don’t use them frequently. Closing old credit card accounts can shorten your credit history and damage your credit score.
7. Not shopping around for the best credit card terms.
There are many different business credit cards available, each with its own terms and fees. It is important to shop around and compare different cards before you apply for one. You should consider factors such as the interest rate, annual fees, rewards programs, and customer service.
By avoiding these common mistakes, you can protect your business credit and set yourself up for financial success.