1. The best way to use a business credit card or line of credit

We suggest business owners use a business credit card for gas, office supplies, and/or utilities to help keep accurate records of their monthly expenses. We also recommend paying the balance in full each month. A business line of credit (LOC) is a good option for short-term working capital, to purchase additional inventory, or assistance with payroll. The advantage of a business line of credit is the flexibility. You can request a maximum amount to borrow and only spend what you need. The benefit is you only have to pay interest on the amount you spend, not on the entire line of credit.

2. The difference between your personal credit and business credit

A business credit score is separate from a personal credit score. A business credit score will show debt repayment and any public records such as tax liens or bankruptcies.

3. Credit score ranges

A personal credit score ranges from 350-850, whereas a business credit score ranges from 0-100. Additionally, a business credit score does not follow the same algorithm as a personal score, so the score may vary from bureau to bureau.

4. Which credit bureaus do lenders and vendors most often use?

A lot of lenders use Experian, Equifax, FICO, or Dun & Bradstreet which issues a D&B D-U-N-S Number.

5. What are the most important factors that influence a business’s credit score?

1) Credit: Number of tradelines, credit utilization, and repayment habits
2) Public Records: Tax liens, judgments, or bankruptcies
3) Demographic Information: Standard Industrial Classification (SIC) code, size of business, and years in business

6. How can you improve your business’s credit?

We suggest using the business tax ID number for utilities, credit cards, and any lines of credit. Then, timely payments should follow.

1) Make sure the credit information is current and report any inaccuracies to the reporting bureau(s)
2) Establish tradelines early on, the length of time a tradeline has been used is important – the longer the better
3) Keeping public records clean by not having any negative information (tax liens, judgments, and/or bankruptcies)
4) Ensure all payments are made timely and pay off credit card balances in full each month