Business credit is not like personal credit. Although they serve similar purposes, they aren’t the same at all. Business credit is going to be used solely for the expansion of your business. Business expenses only or the credit could be in danger of being cancelled. You have to ensure that you have a solid business plan in place to expand the business sand grow it beyond its beginnings. But in order to grow, you have to have some kind of credit. This creates an endless loop in some ways, because you’re stuck trying to figure out how to expand the business without tapping into credit, until you can actually tap into credit.
Which leads to the question: how do you build a business credit rating in the UK? That’s what we’re really trying to do: we want to build a strong credit rating so that when it’s time to get more accounts on credit, we can do so without having to personally guarantee each and every loan.
The first step is in getting your business organized properly. You want to make sure that your business is properly registered, and formed as a limited company. There are other business configurations, but this is one of the most popular ones.
You need to set up your office space outside the home. That’s the mark of a genuine business set up for profit. Finding office space at a decent price can be difficult, but you need to do it. This allows you to get your utilities on in the name of the company, along with phone service. This is hardwired, landline service. Many companies have a dedicated business line; you will need to get one as well. Later on you can get mobile phone service in the name of the company.
You will want to work with small traders and dealers that will accept new businesses. The terms might not be pleasant at the beginning, but you want to get positive references. The only way to accomplish this is through paying all of your accounts on time, every time. In this vein, it’s not that different from a regular credit file. As a regular person, you’ll have to take care of your credit the same way. You don’t want to start paying a lot of things late, because you can end up getting behind when you really need to focus more on expanding the company.
The best part of the business credit building experience is the way your company is viewed by the public and by other companies. Once they see that you’re taking the steps necessary to pursue financing, they’re much more likely to take you seriously and continue to help you get even more financing.
Dun and Bradstreet is an international company, and they can help UK businesses gain a higher reputation for credit purposes. They will offer you fast track options for your company, but you still need to pay credit accounts on time for a while before you have strong business credit.
It can sound complicated, and you may have to look into other resources. But as long as you stay determined to build good credit, there’s nothing you can’t do.