Business Credit 101
Many business owners aren’t even aware of the fact that they have a business credit score, despite the fact that it’s one of the primary components which are evaluated by lenders when you request a loan. Since your business credit score is considered a strong indicator of the general health of your company, it carries a lot of weight in the lending process. Here’s what you should know about your business credit score.
Benefits of strong business credit
When you have a strong business credit score, it can help your company to grow, because you’ll be more appealing to most lending institutions, and the working capital you can acquire via loans can be crucial in growing your business. That good credit score is also transferable, should you decide to sell in the future, and a strong score will add sales value to your company.
How business credit is calculated
The calculation for your business credit involved three main areas, the first of which is demographic information such as the size of your business, number of years in operation, and your standard industry classification (SIC). The second component takes in data from the public record, which lists any bankruptcies or judgments against you, as well as any liens. The third element of your score calculation includes all the individual pieces of your credit history, such as outstanding balances, credit utilization, payment habits, and volume of transactions over a given period.
Duration of credit history lines
Just like with a personal credit score, the lines which appear on your business credit history will stay there for a pre-specified amount of time. All the standard business transactions and trade data entries will remain on your history for three consecutive years before rolling off. Judgments and tax liens stay on your history for a total of six years and nine months before disappearing, and bankruptcies will remain on your business credit history for a full nine years.
Do you need help with your business financing? Contact Trihawk Capital today at 732-784-1808.
