Business credit is very important when you are dealing with a bank. If you have a business that has no business credit score it’s unlikely that your business will be approved for a business loan. The banks go off of a similar system that regular credit bureaus do. They give you a business credit report and a business credit score. If you have no, little, or bad history you are unlikely to even get a credit card.
You must remember that the bank loans money to make money off of it. If you understand this then you will be able to have a good relationship with your bank. There are five important things that banks want before you can get corporate credit.
The first is that the bank expects you to have a savings account. When a company deposits money the bank is then able to loan more money to others. Without these deposits loans would be very difficult to make. Therefore when you open a business account you should make sure that you deposit some money into your savings account.
The second thing that banks look for when you deal with them is a checking account. Although checking accounts never used to make banks money in the past, they are able to now due to monthly fees and overdraft fees.
Next your bank will look for you to sign up for a bill pay service. Not only is it very convenient for the business owner to be able to pay bills through this service, but the bank makes money off of the fees they charge.
The fourth thing the bank will look for is for you to have an ATM/Debit Card. For many business and personal accounts it’s rare that the owner doesn’t get a Debit Card. They are very convenient for paying bills and getting money when the bank is closed. Also the bank makes a ton of money off of overdraft fees due to users not watching their accounts.
Finally you’ll want to get a Visa or MasterCard. You will be able to improve your business credit report by using a credit card. This will enable you to have a better corporate credit rating and make your business eligible for a business loan.
Each one of these five items will factor into the score that the bank gives your business when you request a corporate credit line. Although it may seem unfair for your business credit to be determined by these factors, you have to understand that the banks want to, and need to make money as well. Therefore to have a better chance to build your business credit you will want to have as many of these factors as you can. It will help you get a better score from the banks and improve your chances of getting a business loan or line of credit. You need business credit when dealing with banks because they want to make money and if you have business credit they see you as a source of income.
Tags: business credit report | business credit score | business credit score | corporate credit | corporate credit | business credit | business credit | business loan | business loan