Hello business tycoons! Are you all ready to know about the business credit score? We are sure that understanding business credit score can be challenging. That is why in this article we will make sure to help you know all about the business credit score in detail.
If you are planning to make a purchase then you might have come across vendors asking about your credit score. Well, that might have put you into some deep thoughts as well. This is simply because you do not have enough knowledge what a business credit score is.
A business credit score simply helps to understand the credibility of your business. It tells whether the company is eligible to be a loan receiver or a consumer for other businesses. It even helps to understand the creditworthiness of the business. Therefore, company's past history of transactions made with suppliers or lenders is analyzed by the credit scoring firms. So, there are credit scoring firms who make sure to calculate and analyze the credits scores to make sure if the company is eligible enough to make a transaction or not. There are other factors as well that are judged to ensure the credibility of the company. Some of these factors are as follows:
We are sure that you must be wondering whether the business credit score is same as the personal credit score. Well, this confusion must be hindering you to understand the concept of business credit score clearly.Â
So let's begin!
If you are perceiving that business credit scores are same as personal scores then you are definitely correct. However, the business credit scores are a part of a different range. This means that the higher the credit score is the lower the chances of risk is perceived. So if you want to check credit score of any company then you can also judge this by considering the credit score of the company.
Companies with a high credit score are prone to secure the finances of their business better. So if the company has a high credit score this means that low interest rate will be charged on that company.
Business credit scores and personal credit scores are considered to be interdependent. This is because they both serve the similar purpose but work for different fields. Personal credit score can be well understood from how an individual's credit score is eligible to apply for any loans. This is taking an individual's personal account into consideration. However, the business credit score means the credibility of the company to opt for loans, repayments and other transactions that are discussed above.
There is one major difference between the personals credit score and the business credit score. This difference is that there are no reports for business credit score from the Federal Government. This is because the business credits are not looked after the Fair Credit Reporting Act. So, the business credit score is easily accessible to any person who requires to know the information about the company's credibility. The companies are also not given with the rights to freeze their credit score reports. These reports have to be available to the public.
It is even true that business credits do have an impact on the personal credit scores. This is because a personal guarantee is required for business credits and loans. So if the business credit account suffers any default, then there are chances that the personal assets can be taken away. Mostly, the reports of business credit cards are seen on the personal credit report.
Now that you know the business credit scores and personal credit scores are similar but with different purpose, let's discuss the major differences between the business credit score and personal credit scores.
Personal Credit Score:
A personal credit scores helps the lender to analyze whether you are eligible to apply for a loan. If yes, then what should be the maximum limit of amount that can be allowed and on what terms and conditions? There are different types of personals credit cores and all have different ranges. One rule that remains same for business credit as well as personal credit is, that the higher the credit score is, the more borrower is considered to be financially trustworthy by the lenders.
Business Credit Scores:
The business credit scores are also known as commercial credit score. This helps the financial institutions and other lenders (suppliers or venders) to analyze and check credit rating. If the credit score is higher and your company is eligible to get the loan, then only the loan is provided and allowed. Credit analysis company in Malaysia ensures to check the credit score and then decide whether the credit should be given or not. The credit analysis company in Malaysia does not only allow the credit but there are other terms provided that are favorable for this.
To check credit rating Malaysia the suppliers and the vendors often take this step while invoicing. Therefore, some differences are as follows:
Do you try to increase your personal credit score every time you make a purchase? Well, that is your business credit score should be treated. If you are thinking that why does maintaining a business credit score is important then here you go!
As your business credit score is similar to your personal credit score, therefore both should be treated equally important. But when it is specifically about business credit score then it is a big YES! Your business credit score really matters.
This is because to avail the business products and other opportunities, the first thing that is ensured by the Credit Analysis Company in Malaysia is to check credit score. There are certain entrepreneurs who do not have employees working for them, or they may run a small business do not really require a business credit loan. But if you want to expend your business in the long run, or you want to move on with any other activity then you might definitely require a business credit loan.
For similar purposes you need to make sure that the business credit score is well maintained so that it is easy for the company to avail the credit loans. That is why business credit files are made sure to be healthy to be analyzed to check credit rating Malaysia.
Not only this but healthy business credit scores and files are maintained to attract the vendors and suppliers as well. So if you want to avail and government leans them maintain business credit score is necessary.
If you are thinking that only large firms require to maintain healthy credit scores, then you are mistaken. This is because all types and sizes of business require to maintain their credit loan. Even if there are few employees in the business, still the company needs to maintain its credit score to avail credit loan options in future. Any type of business or industry can simply benefit from high business credit scores.
What happens when you break down business credit scores? This question must be hindering your thoughts now. To understand this, let's simple take an example.
For instance, you want to buy equipment and for you avail the option of purchasing it on the basis of our business credit score. Now the first step that is ensured is to check the credit rating of your company by the Credit Analysis Company in Malaysia. This is to approve whether your company is eligible to get a credit loan or not. Therefore, the business revenues, assets, profits, collateral value, liabilities, etc. all are analyzed to check credit rating Malaysia.
For small businesses even the personal credit score of the owner is required to ensure the eligibility. To check credit score of business owner's the personal credit score is also kept into consideration. This is because in small businesses there are no stakeholders or employees who have a share in the company. If the business pay the all the bills on time then the score increasing. The business is even free from any legal issues that might put a halt on business in the long run.
Business Credit Score in Action:
Now before working with any other company, it is required to check credit score of that company. For example, if you are company A and want to work with company B as their client or customer then the first step you make is to check credit rating of that company. You analyze whether Company B is eligible to work with and if the company will provide payments right on time. Naturally, you would not want to work and put in all your efforts in a company that does not pay off all the invoices in time.
That is why Company A will make sure to check the credit score Malaysia and the Credit Analysis Company in Malaysia will even analyze the financial history of Company B. A decision is then made on these basis and factors. A subscription service can also be availed to check credit score of Company B.
If a drop in the credit score is observed, then Company A has all the rights to lower down risks. This can be done by either discontinuing to proceed on with business or asking for advance payments.
Are you using your personal credit card to get loans for your business? There are times when the business activities are facing a downfall. So the most common step that is taken by the business owners is to use their personal credit score to get loans for business. And this way is definitely not at all favorable. This simply highlights why business credit score is important.
Even if the business activities are running well, you still require to maintain your business credit score. This is due to the following reasons:
If the business credit score is high and well maintained then it is easy for you to receive business credit loans at considerably favorable terms and conditions.
We all are familiar with the high costs and expense of insurance. So as your business starts growing you cannot stay away from insurance for a long time. You definitely get your company insured. So having a good credit score it is easy for you to get insurance at lower rates.
Once you have created a separate business account and maintained a healthy business credit score, then it is easy for you to analyze your business finances well. This is because your personal finances are separated from the business finances. This method makes it convenient to keep a track of the business expenses as well as the taxes.
Naturally, if a healthy and a strong credit score is maintained, then the borrowing power is also increased. It is also easy for you to borrow large amounts of loans without any obstacle hindering in between.
You know the importance of establishing a healthy and a good business credit score. Apparently, you are not done with your understanding yet. This is because you still need to understand the importance of why is it necessary to learn how to establish a business credit. We are sure that a few major benefits of establishing business credit will definitely help you out!
If you want to lower the interest rates on the loans, decrease the times of instances to pay for some products or services and ensure that the terms of trade with the suppliers and the venders are secure, then a strong business credit is all what you need. This is will even help you liquidate the cash flow, save more money, and conveniently access the assets or funds that might grow your business in the long run.
If you have a bad business credit score, then the situation is vice versa. You are not able to enjoy all the incredible benefits anymore. One of the main reasons that business owners are not allowed for funding is their failure to maintain their credit score.
Apart from this, another major issue arises when the business owners are using their personal guarantee for financing. As discussed earlier, a personal guarantee is the promise made by the business owner to stand responsible for all their business debts. So many of the business owners end up using their personal account for fulfilling their entrepreneurial dreams.
These reasons clearly explain why is it important and necessary to learn how to establish business credit. If you fail to do so, then it is difficult to grow your business in the long run.
Building a business credit is definitely not a difficult task. You need to make sure that you establish a separate business account for this. The credit bureaus and the Credit Analysis Company in Malaysia ensures to check credit score rating Malaysia and then make a decision accordingly.
That is why, below 5 steps provided is a simple procedure that will help you build business credit.
After knowing the importance of business credit, it is definitely necessary to build business credit now. So don't further delay the process and follow these steps below:
If you are already running your business, or if you are planning to begin with it already, then the first thing you need to make sure is to include your business in the map. From this we means that you should not further delay in registering your business. This is because it is easy for you establish you credit once you have done the registration. Get an official contact number of your business and make sure to list it in the directory. Your official business back account is the next step that should be focused on. This will help you to make payments of bills and invoices on behalf of your business name and account, and not your personal name and account. Don't forget to start maintaining your business credit file along with it.
The next step is to start building string relationship with the vendors and suppliers. This is because if you have secured your relationship with them in the initial stages, half of your stressed is released. In fact, you also need to make sure that you establish relationship and open business accounts with vendors who report frequently to credit bureaus. This is because the credit bureaus check credit score Malaysia and then rate your business credit accordingly.
Once you have registered your business bank account, you are all ready for lending and borrowing from your suppliers and vendors. But to maintain a healthy credit score you need to make sure that you pay all the invoices and bill on time. If this is followed, then your business score eventually rises. If anyone check credit rating then it always gives a positive impact.
The Credit Analysis Company in Malaysia is responsible to report your credit score to other agencies and credit bureaus. This is to check credit rating Malaysia. That is why make sure you have minimum one credit card activated and in your use. But make sure that you do not get carried away if you have enough finances. This definitely does not mean that you can activate multiple business credit cards and start overextending the finances.
There are cases when the credit reports have inaccurate credit information regarding your business. That is why it is important to monitor every transaction made. This eliminates the chances of errors and you can definitely claim if any wrong information is incorporated.
There are several business credit score factors that help us to determine how well our business credit score is doing to either improve the business functions or to sink them. Therefore, these business credit score factors are as follows:
The payment history included making payments on time, no chance of missing any due dates, the frequency of paying invoices and the payment reliability schedule.
It depends on the number of credit accounts you possess, total amount of credit, and the amount of credit that you must be utilizing currently.
It tells since how long you have been using credit for your business; basically the age of the credit.
How many times have your credit score and your credit account has been inquired recently by the clients.
How many types of credit accounts you have been using in your business. This factor is also known as credit mix.
There are certain business credit agencies that make sure to analyze and then provide the business credit score. These agencies check credit score and then decide to extent the credit should be given to the company. These business scores are as follows:
CreditScan Malaysia is a credit bureau portal that is developed by Dun and Bradstreet. This portal is exclusively for Malaysia and provides commercially based solutions for business credits. This portal even helps entrepreneurs to find out business opportunities and face challenges.
Credit Signal allows to know business credit score for free. This portal is developed by Dun and Bradstreet, Malaysia especially for small businesses. It even helps with evaluation of rating of risks and predicts the score of the business credit.
Credit Safe is platform that helps firms to predict the future risks that might impact their business in future. It also predicts whether the company will be able to make timely payments in the long run while making decent credit offering to the clients.
Are you thinking to know your credit score after reading the above-mentioned credit score details? We are sure you must be curious to know. Well, there is definitely a way out.
If you want to view your business credit score for free then there are some hurdles that you might have to face. But don't you worry, because exceptions are always there to safe us. Similarly, to access the business credit scores for free you can got to Nav. Nav provides business credit reports and score summary for free. The data has been from either Equifax, Experian, or Dun and Bradstreet.
As discussed above, Dun and Bradstreet ensures to provide updates frequently every time an on time payment is made. This is a free service provided that is also known as Credit Signal.
If you want to know the creditworthiness of a company you are planning to work with, you should definitely view the company's credit report. This can be done by ensuring the following steps:
You simply need to begin by conducting a research on the internet. You can type the name or the location of the company on the search engine, i.e. Google, and then enter to get the desired results.
Next, you can search about your registered businesses in Malaysia. You can simply check the location of the business from where the offer has been given to you.
Type the name and the location of the business on the Dun and Bradstreet website.
You can then search about the credit agency in the same location where the company is on the search engine.
Once you have found the free credit agency then you can simply submit the credit report that you found out.
Once the credit report has been submitted you can then search for the company details.
The transaction must be completed now and you can view the credit score easily to compare it.
One thing to note that if the credit report is not free then you will definitely have to pay for the download you have made.
All the credit score types have their own way of calculating the credit score. Therefore, in this article we will discuss the method of calculation made by the main ones.
The credit bureaus generally extract information from different sources that include banks, vendors, trade association of data gathering, and credit card issuers for business. The information is also verified from the 3rd parties.
There are cases when the bureau has published incorrect data. Therefore you can claim for these errors made and can correct them.
As discusses above, there are few main Malaysian credit bureau agencies that allows checking your business credit score. These are the portals which are as follows:
The credit score in Credit Scan ranges from 350 to 850. From which, the score from 744-850 is considered to be excellent. And the range 300 to 528 is considered as poor. This means that there are 0 chances to get a loan.
To check your credit score from Credit signal you need to sign up at creditsignal.com. After signing in you are allowed to make changes in the credit reports, if there are errors.
Log in to creditsafe.com. After logging in you will be allowed to access your credit report for free, if you want to. There are also different credit monitoring tools available that will guide you to track your business credit records.
You can improve your business credit score in the following ways:
Your business credit history takes some time to build healthily. That is why if there are any bad credit score you can definitely fix it in the following ways:
There are various cases reported that simply tell that the personal information from the credit reports and the business information can be misused or stolen by the thieves. Therefore, it is highly important to make sure that your credit is protected. You can simply do this by:
Now that you know that your business credit score will be analyzed by investors, partners and even vendors to continue working with, you need to be smart with your business credit score. Get a business account and credit card to make frequent purchases, build relationship with vendors who directly report to credit bureaus and make sure to always make payments on time.
Once all this is handy, your credit score is always high!
