2017-03-15 00:00:00 Funding and Financing English Find out how to grow business credit in a few steps. Learn about types of credit to use and how credit bureaus calculate your business's... https://quickbooks.intuit.com/ca/resources/ca_qrc/uploads/2017/06/Delivery-specialist-on-bicycle-views-business-credit-on-smartphone.jpg https://quickbooks.intuit.com/ca/resources/funding-financing/how-to-grow-business-account-in-canada/ How to Grow Business Credit in Canada

How to Grow Business Credit in Canada

2 min read

If your small business is just starting out, then it probably has a low credit score. Credit takes time to establish, which is why you should get started on building your business’s credit as soon as possible. A high business credit score save you on interest for any future business loans you obtain, and it can also help your business’s reputation, because anyone can look up your business’s credit score. Find out how to grow your business credit gradually.

Use a Business Credit Card

You should use a business credit card for as many business-related expenses as possible. The benefits of using your business credit card include:

  • It’s easy to keep business and personal transactions separate when you have a business credit card for only business expenses.
  • Using a business credit card improves your business credit score.
  • You can earn reward points or frequent flyer miles through purchases made on your business credit card, which gets you a return on your spending.

Set Up Trade Lines

If your business makes purchases from a supplier, inquire about setting up trade lines so you can pay for goods a short time after receiving them. Then, you can request that the supplier reports these transactions to the credit bureaus, which builds your business’s credit score.

Always Pay on Time

While credit score calculations vary for each credit bureau, they all put a premium on your payment history. To build and maintain a high business credit score, make sure that you pay all of your business’s bills on time. Set up automatic payments, if necessary. Ideally, you should pay all of your bills before their due dates.

Don’t Use Too Much Credit

Another significant factor that determines your business’s credit score is its credit utilization, which is the amount of its available credit that it uses. It’s best to keep this under 30%; keeping it under 20% is even better. Credit bureaus consider your credit utilization for all of your lines of credit, not just any one line of credit. If you have multiple business credit cards, then credit bureaus look at your combined credit utilization compared to its combined credit limits.

Check Your Credit Report with Each Credit Bureau

There are three credit bureaus that issue credit reports for your business: Dun & Bradstreet, Equifax, and TransUnion. Don’t assume that the credit bureaus always get it right, as there could be errors on one or more of your credit reports. The only way to know for sure is to request a credit report from each bureau at regular intervals and check them for any mistakes. If you find any, report them immediately to both the credit bureau and the creditor so you can get them removed. Getting a higher credit score for your business isn’t complicated. You need to obtain one or more lines of credit, use them, and pay all your bills on time. Once you do that, check in on your credit reports from time to time to make sure there aren’t any issues.

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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