"The more I practice, the luckier I get." - Gary Player

Introduction:

What makes up your business credit score? What gives you the best chance of getting a loan?

Here are a few factors that play into your business credit picture and how you can make the most of them:

5 Factors That Affect Your Business Credit:

1. Payment History: Your business credit profile is significantly influenced by this aspect, serving as the foundation of your D&B PAYDEX score. Vendors assess your entire credit situation, with your PAYDEX being a crucial component. This underscores the importance of maintaining a positive payment history, putting you in the driver's seat of your credit profile.

2. Blanket UCC Filings: The sequence in which you acquire certain loans and the UCC filings that lenders make are crucial. Some lenders might file a blanket UCC filing, indicating their interest in ALL your assets. These filings take precedence over any subsequent ones, significantly limiting your ability to secure credit elsewhere. This highlights the need for caution and strategic planning in negotiating UCC filings to protect your credit options.

What you can do: plan your credit with care and negotiate UCC filings according to your needs. For example, if you need your office equipment to be excluded from a UCC filing to use as security for another loan, you can explain this in advance. That way, you can exclude those items from any blanket filings. Or get the loan or account with the more specific UCC filing first. Some experts recommend opening accounts with competing UCC filings at the same time. And negotiate the details with each party simultaneously.

4. Company Financials: With Dun & Bradstreet (D&B), a major credit reporting agency, ensuring your credit file's financials are up to date is essential. If they are, it could positively reflect on your company when the lender compares available data. You can update your financials on your credit reports. Make sure they reflect your current circumstances. And plan to update often.

5. Company Legal Structure: having an LLC or corporation versus a partnership can also affect business credit. Lenders are less likely to loan money to sole proprietorships and partnerships. They prefer corporations and limited liability companies. So, if you aren't incorporated, you should be. The advantages go far past your ability to get credit. Other factors affect your ability to get credit, like the amount of debt you already have and how heavily invested you are in your company.

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