Personal Credit Score

Yes and no. The actual act of factoring has no impact on your business or personal credit score as it is a transaction that does not involve credit. However, factoring can help you improve your credit score in other ways.

Personal Credit Score and Business Credit Rating

The key to building both your personal and your business credit ratings is consistency. You need to pay your bills on time and not use too much credit at any given time.

You probably know that if you have any problems on your personal credit history, or a poor credit rating,getting new credit cards or loans at decent rates is near impossible. The same holds true for businesses. Until a business has a solid credit rating, getting a loan or line of credit is near impossible.

The business itself has no credit profile yet. Personal credit lines offer a way to raise funds to get the business up and running. But, that doesn't build the company's credit rating.

Building the Business's Credit Rating

For a business to have a credit profile, the owner needs to do a couple of things.

Get a Duns Number. This number is issued by Dun and Bradstreet, a major credit reporting company exclusively dealing with businesses. This number acts as an identifier for potential creditors to use to view the business' open credit lines and used credit.

Open accounts in the business name. It starts with checking and savings accounts in the business name. It includes credit cards as well as vendor, supplier, and manufacturer accounts. All of this credit gets reported to Dun and Bradstreet, creating a credit profile for the business.

This is the start of establishing the company's credit rating. But, like personal credit ratings, a company's rating can be great, good, poor, and bad. For the best opportunities, a company's rating needs to be good building towards great.

Using Factoring to Improve the Company's Credit Profile

How do you improve your company's credit rating? And how do you use factoring to do