Many small businesses owners rely on their personal credit to
secure funding for their work. But savvy owners know that personal
credit is just a starting point: Those who work diligently to get
and strengthen a commercial credit score put themselves in a better
position to secure more credit, lower interest rates and better
Perhaps most importantly, says Adam Fingersh, senior vice
president of business information services at Experian, a strong
commercial credit score will allow you to make a meaningful
separation between your work and personal finances. Eventually,
you'll be able to get credit backed solely by your business
financials, instead of a personal guarantee required by most small
business credit cards. "If something negative happens on the
personal side of your life -- a loan delinquency or a foreclosure,
for example -- it doesn't negatively affect your ability to get
funding for your business or vice versa," Fingersh says.
Like a personal credit score, commercial scores have lots of
moving parts, and many of them have an impact on your final number.
To get a high score, know -- and follow -- the eight guidelines
1. Understand what you're looking at.
A commercial credit score is between 1 and 100 and represents a
percentage; a score of 90 means your credit risk is better than 90
percent of similar businesses. "The score takes into account
financial and nonfinancial transactions and looks at other
businesses in your industry and geographical area," says says Rohit
Arora, founder and CEO of Biz2Credit. "It's a weighted mean based
on all of these factors."
2. Use your Tax Identification Number (TIN).
Your commercial credit score typically starts the day you
incorporate your company or officially get a tax identification
number. "Any place you use your TIN number -- to sign up for
utilities, to start a relationship with a supplier or vendor -- is
a data point on your score," explains Arora. Use this number, as
opposed to personal credit information, to create a more robust
credit file for your business.
3. Pay reliably.
As with personal credit scores, paying bills on time is the best
way to build your credit score. Delinquent payments can have an
immediate and significant negative effect on credit scores.
4. Be patient.
If your score is lower than you want it to be because it's a thin
file or you've bungled a payment in the past, don't expect
improvements overnight, says New York attorney Leslie Tayne. "There
is no quick fix," she says. "You've just got to keep doing do the
right things -- paying bills, getting credit, paying it off -- over
5. Find overlooked problems.
Sometimes, a deep dive into a commercial credit report can show
small but critical problems that can be easily resolved. "Maybe
your business is using an automated system that pays your utility
bill five days past due every month because the payment cycle is
set up incorrectly," says Fingersh. You might be surprised to learn
your corporate filing has lapsed, or there's a lien or judgment
against your business. Some fixes may take minutes to get you back
on the right path.
6. Check for errors.
Just as personal credit reports sometimes contain erroneous
information, so can commercial credit scores. If something doesn't
look right, contact the credit bureau and the company that's
misreporting the information to get the problem resolved.
7. Make sure everything is being reported.
If you've had a long-term relationship with a vendor or supplier,
ask them to report the information if you don't see it on your
report. "You want to make sure that the businesses that you have
credit relationships with are reporting your information," says
8. Don't improve blindly.
It's smart to try to secure a high commercial credit score, but if
you have a specific goal in mind, don't leave it to chance, says
Tayne. "If you know you're going to need significant credit for
something a year from now, talk to the agency [you want to extend
you credit], and ask, 'What would you want to see on my credit
report?' Once you know that specific goal -- whether it's to clean
up your credit or bring your score up -- it's easier to