10 Ways Good Credit Is Good Business

By QuickBooks

4 min read

You may have one of those lucky businesses that never needs funding. But even if you never borrow a dime, having good credit needs to be on your business to-do list.

Read why good business credit matters. Then check out our tips for building it up.

Customers trust it
Clients and customers are selective when they choose who to do business with. Tip their decision in your favor with your strong credit rating.

Suppliers respect it
Everyone wants to get paid ASAP, but you may be able to negotiate longer terms—from 30 days to 45 days or longer—when your track record is trustworthy.

Businesses depend on it
Some suppliers and companies may offer credit without a credit history. But many won’t. So take advantage of those that do to build your rating.

Credit cards leverage it
Credit card rates vary wildly, and a strong business credit score can help you get a better APR.

Landlords live by it
A strong credit rating can help you negotiate better terms when your lease is up, or when you’re looking for a new space.

Employees want it
While most prospective employees may not check business credit ratings, some do—and your favorite candidate may go with the employer they feel will be able to pay them on time.

Lessors love it
Whatever you’re leasing—equipment, vehicles, retail space—with a solid credit rating, you may have more bargaining power.

Cash flow affects it
A healthy cash flow can leave you with more options for your business needs. Higher accounts receivable and lower accounts payable can be indicators of healthy cash flow, which you can leverage if you want to expand or improve your business and you start researching financing options.

Separating your personal and business credit and paying bills promptly increases your chances of getting more credit when you need it
It is usually advisable to keep personal and business credit accounts separate in order to to reduce financial impacts between your business credit life and your personal credit life. And having good credit increases the chances of getting additional credit when you want it.

Lenders consider it
The higher your business credit score, the easier it may be to negotiate interest rates, terms, and loan amounts. In fact, with a strong rating, lenders may compete to fund you.

Tips to raise your score

Take a number

Apply for a tax ID number (EIN) with the IRS (don’t use your social security number for business).

Pay on time

Whether it’s rent, a vehicle lease, supplier invoices or utility bills—don’t let any of it lapse.

Get listed

Register with Dun & Bradstreet, a top credit bureau, or open lines of credit that are reported to Experian Small Business, and Equifax Small Business.

Start easy and keep building

Get lines of credit with respected companies that report to business credit bureaus. Pay these bills promptly. See what you may qualify for with QuickBooks Capital.

Get credit

Ask firms you work with if they report your payments to credit bureaus. When considering legal, accounting, and consulting firms in the future, consider going with businesses that do report.

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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