Business credit in the form of a credit account with vendors offers important benefits for your company. First, it allows your organization to obtain the products or services it needs now and spread the payments out over time.

Although most people are aware of this benefit, they often don’t stop to consider how business credit helps them establish a credit rating. Assuming you pay your vendors on time, having a positive business credit report will help you apply for and receive larger credit lines with more generous repayment terms in the future.

What Do Creditors Look for When Evaluating Customers for Commercial Credit?

Vendors take a huge risk when they allow customers to buy products and services on credit. They are stuck with a loss if the customer fails to pay. In some cases, this is true even if the customer offers collateral. From a business owner’s perspective, it makes sense to thoroughly evaluate all credit requests before granting them. Here are some things that typical business credit grantors look for when determining whether to approve or deny a credit request:

How often the applicant takes out new credit and amount of available credit

Credit limits assigned by other lenders

Whether the applicant routinely pays debt obligations on time or runs at least 30 days behind  

The credit score assigned to a business credit file also makes a huge difference when it comes to evaluating a new credit application.

Take This Important Step as a Commercial Credit Applicant

Only a small percentage of vendors report creditor activity to commercial credit reporting agencies like Dun & Bradstreet. As an applicant, be sure to ask whether the lender reports payment history to help you build a positive file. The fact that you asked also sends the message to your creditor that you intend to pay your business bills on time.

Have additional questions about obtaining credit for your business? Achieve Capital Advisors can help. Please contact us at your convenience to learn more about this and other financial products than can help keep cash flow concerns at bay for your business.