We all know the importance of a good credit profile in our personal lives, but it is just as vital for a small business. Building your business’s credit profile can be a passport to growth as it may help your business qualify for financing, secure better interest rates, add to working capital, lease equipment or vehicles or even acquire another business.

Good business credit allows you to:

  • Qualify for financing
  • Secure better interest rates
  • Add to working capital
  • Lease equipment and vehicles
  • Acquire another business

So, if big opportunities or new challenges arise, you can have the capital to navigate the situation in a way that helps your business move forward.

Where do you start if you want to improve your business credit profile?

While the process can seem intimidating, here are four steps you can take to build your business credit profile…

1. Open a business checking account. Before you do anything, be sure to open both a business checking and savings account. This will help establish your business as a separate entity. This is a very simple yet important step.

2. Apply for a business credit card. Apply for a business credit card and use it to pay for your business expenses to keep them separate from personal ones. Then be sure to pay the bill on time every month. Set reminders in your calendar if need be.

3. Keep the percentage of business credit you use to 30% or less. Be mindful of how much of your credit you are utilizing. It is important to make sure you use only 30% or less of your available credit. Low utilization tells lenders you can manage credit in a responsible way.

4. Monitor your credit scores and reports. Monitor your credit scores and reports with credit reporting providers like Dun & Bradstreet, Equifax, and Experian to be sure their information is accurate, and to correct any errors.

While the steps may be simple, building a business credit profile isn’t something that happens overnight. But in the long term, you’ll be in a better position to borrow money when you need it.