Building good credit is as essential for businesses and corporate entities as it is for individuals. A solid credit score opens avenues to larger loans and better terms, yes, but it’s also important for securing contracts with top-notch suppliers, wholesalers, freight carriers, etc.—any partners that will be doing work for you or delivering goods to you before being paid. Your business’s score also influences the interest rates that you’ll be paying, where applicable. But how do you go about improving—or establishing—your business credit score? The process isn’t quite as straightforward as it is for personal credit, but there are some relatively easy tricks for building a sterling credit rating.

Before we jump in, though, there are a few things to note about these tips. First and foremost, our advice is primarily geared toward businesses that are operating and have some established history, not startups or groups looking to secure financing for new business ventures. Second, these tips assume that businesses are incorporated, have a federal employer identification number (EIN), and conduct financial transactions via a corporate bank account. If any of those don’t apply to your business, start there.

Work with Vendors That Report Payments, Then Pay Them Early

This tip is sort of a two-for-one deal because the individual components are so closely tied. The first part is probably obvious—whenever possible, work with vendors or suppliers that report payments to major credit bureaus (including TransCredit). You may have years of on-time payments, but if your partners don’t report them then your diligence isn’t benefiting your business the way that it could. Don’t be afraid to ask your business partners if they report payments, and don’t be afraid to seek out better partners if the ones you have now aren’t doing everything they can (within reason, of course) to help you thrive.

Once you’ve secured arrangements with partners that report to credit bureaus, pay them early—not “on-time”, and certainly never late. Why? Because several business credit bureaus reserve their highest scores for entities with a history of early payment. Even the ones that don’t give “bonus points” for early payments usually note detailed payment information that other creditors/business partners can see. This differs significantly from personal credit reporting, where payment timing is essentially irrelevant if it isn’t late enough to generate a negative remark on your report. Establishing a reliable history of early payment will only benefit your business.

Establish Lines of Trade Credit

If you find your business working with partners that are willing to deliver goods or services on an accounts-payable basis, take them up on that offer. Those lines of trade credit can be an excellent way to give your business credit score a quick shot in the arm, even if it’s from a small vendor like an office supply company. Provided you adhere to the terms of your contract and remit payment within the specified timeframe, you should expect to see a relatively significant uptick in your credit score.

In instances of trade credit lines, your partners don’t need to report directly to credit bureaus (though it is beneficial if they do). Instead, you may be able to list these partners as trade references on your accounts and have someone follow up with them to verify the information you’ve provided. Not all credit bureaus allow this, of course, but it’s a common enough practice that you should at least inquire about the possibility. Information is crucial in business—never be afraid to ask your partners if they conduct (or can conduct) their affairs in a manner that also that works to your benefit.

Businesses of all sizes and in nearly all verticals need to be increasingly cautious when choosing business partners. Planning for long-term success includes paying attention to credit scores, both your own and those of your partners. Let TransCredit help you with your credit needs. Contact us today.