7 Tips for Building Business Credit for Fleet Owners
Operating a fleet is many things, but “cheap” is not one of them. Fleet ownership typically entails covering hefty costs, including drivers’ wages, vehicle purchases, repair and maintenance costs, and fuel costs—and that’s just the start.
There may eventually come a time when you’re ready to expand your fleet or need to upgrade dated equipment, and these are no small investments. Business loans can help you make the improvements you need, but you’ll need a good business credit score to get the most ideal terms, or to be approved at all.
Fortunately, in this article, we’re breaking down everything you need to know about building business credit as a fleet owner, including why credit is important, when to start building credit, and the best ways to do so.
Why Building Business Credit Matters for Fleet Owners
As mentioned, establishing good business credit can make it easier to get approved for a business loan if you ever need to apply for one, but that’s not the only benefit.
Customers and prospective partners may review your business credit information before deciding to enter a contract with you—it is publicly accessible information, after all—so as a fleet owner, it’s in your best interest to maintain a strong credit history.
How Does Business Credit Work?
Business credit works similarly to the way that personal credit does, but there are also some differences between the two.
When it comes to business credit, there are three main bureaus to be aware of: Dun & Bradstreet, Equifax, and Experian. Various vendors and money lenders may report your borrowing, spending, and payment habits to one or all three of these bureaus. However, reporting is optional.
Additionally, these bureaus use different ranges to determine credit scores. The Experian Intelliscore and the D&B Paydex score both range from 0 to 100, with higher scores being considered more ideal 1. Equifax, meanwhile, uses three different types of scores to determine the risk associated with your business: a standard credit risk score, a payment history score, and a business failure score that measures your risk of going out of business 2.
If you have yet to establish a business credit history, you may discover you have no score with these bureaus or a low score for lack of information. Once you start establishing a reliable payment history with a small business fuel card, for example, you can start to build business credit.
When to Start Building Business Credit
Having good business credit is crucial during pivotal moments for your fleet operation. For instance, you’ll want to have good business credit if:
- Your business operations have a firm foundation and you’re ready for expansion
- You plan to take out a business loan to upgrade equipment or make other investments in your fleet
- You want to establish credibility with prospective partners and customers
If any of these goals resonate with you, the best time to start building your business credit is now.
Our Top 7 Tips for Building Business Credit
Building credit takes time. With the following tips, you can kickstart the process and be well on your way to achieving the type of business credit score that will keep your fleet up and running and help you reach your business goals.
#1 Register Your Business
Before you can establish the credit lines that will help you build your business credit score, you’ll need to make sure you have a properly registered business so you can apply for and open the necessary accounts.
The steps you’ll need to take to register your business will vary depending on:
- The size of your operation
- Your fleet’s business structure
- Your location
It’s also important to note that how you choose to register your business will affect what sort of funding and business credit cards you can apply for. To apply for an AtoB card, for example, your fleet should be registered as an LLC, C-Corporation, or as non-profit.
#2 Be Strategic About Where You Borrow
Not all vendors report to business credit reporting agencies. If your goal is to establish strong business credit for your fleet, you should prioritize finding lenders and vendors that report to the major business credit bureaus mentioned above.
#3 Apply for a D-U-N-S Number
A D-U-N-S Number is a nine-digit number used by Dun & Bradstreet to identify your business. It can also be used to pursue new contracts, apply for loans, and more.
You can learn more about D-U-N-S numbers and get your own D-U-N-S number for free via the Dun & Bradstreet website.
#4 Apply for a Business Credit Card or Fuel Card
Just as with personal credit, using a business gas card and establishing a reliable payment history will build your business credit.
For fleet owners, using a secured fuel card to build credit can come with additional perks, like significant fuel discounts, and they’re often a great starting point for fleet businesses in the early stages of building credit.
#5 Make Payments Early or On Time
Having a reliable payment history is just as important for building business credit as it is for building personal credit. On-time payments are excellent in the eyes of all the bureaus, but early payments are even better for Dun & Bradstreet, which awards the highest business credit scores to those who reliably make early payments.
#6 Monitor Your Fleet’s Credit Utilization
Once your business has open lines of credit, monitor their usage and try to limit total utilization to less than 30%. The simple rule of thumb here is to not borrow more than you’re capable of paying back, which will only end up hurting your score if you’re not able to keep up with payments.
Fortunately, some fuel cards (like AtoB fuel cards) allow you to set limits that can help you keep spending in check.
#7 Monitor Your Credit Reports Regularly
The least ideal time to find out your business credit has tanked is when you need to apply for a new loan or line of credit. Keeping an eye on your business credit reports with all the major business credit bureaus can help you catch any signs of fraud and correct any errors before they impact your score.
However, it’s important to note that you’ll often need to pay to see your business’s credit report, as well as to receive routine alerts.
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How to Build Business Credit With Fuel Cards
As we mentioned earlier, using fuel cards can be an extremely effective way for fleet owners to establish business credit, especially when trying to do so early on, as fleets will always have a need to purchase fuel no matter how long the business has been up and running.
If you’re interested in taking advantage of fuel cards to build your business’ credit, consider the following tips:
- Choose a fuel card that offers perks and convenience – Beyond helping you build business credit, the best fuel card options will also come with additional benefits to help your fleet save on expenses and even streamline operations. AtoB fuel cards, for instance, are a convenient option for local and interstate fleets alike as they can be used for vehicle-related purchases anywhere VISA is accepted. Plus, they come with various perks that can help you save on fuel, vehicle maintenance costs, and more.
- Use the card to make purchases – Be sure to organize training for your drivers so they understand how the card can and can’t be used. To make management even easier (and avoid overspending disasters), certain fuel cards (like the AtoB fuel card) allow you to whitelist certain vendors and set both spending limits and hours of operation.
- Monitor your usage and make regular, on-time payments – Keep track of your spending, and use reminders or set up automatic payments to ensure your fuel card’s bill is always paid on time. AtoB’s fuel card allows you to easily monitor expenses at the card, location, and driver level and run reports with a user-friendly dashboard so you can keep expenses within your means and your credit utilization where it needs to be.
- Watch your business credit build – The amount of time it’ll take to see your credit score improve will depend on the size of your business, the bureau’s scoring criteria, your current business credit standing, and other factors. However, once you’ve established a solid payment history, you could see your business credit start to grow in as little as several months to a year.
Build Your Business Credit with an AtoB Fuel Card
Looking for a practical, easy-to-use fuel card to build your business credit and get your drivers from point A to B? Allow us to introduce you to the AtoB fuel card.
With the AtoB fuel card you can make vehicle-related purchases anywhere Visa is accepted. This means it can help you build credit and streamline operations. After all, when your drivers don’t need to deviate from their route just to find a fuel station compatible with their fuel card, deliveries get completed on time, every time.
The AtoB fuel card’s security features can also help protect your fleet from fuel card fraud attempts. SMS unlock and Telematics verify every transaction so your account can remain secure.
Contact us today to learn more about how the AtoB fuel card can help you build your business credit, streamline your operations, and optimize your entire fleet.
Sources:
1 Nav. What Is a Good Business Credit Score? https://www.nav.com/resource/what-is-a-good-business-credit-score/
2 Command Credit. What Is a Good Business Credit Score? https://www.commandcredit.net/what-is-a-good-business-credit-score/#:~:text=Equifax%20Business%20Credit%20Risk%20Score&text=Business%20Credit%20Risk%3A%20The%20business,is%20generally%20considered%20good%20credit.
FleetCardsUSA. Is a Fleet Card the Key to Building Business Credit?
BusinessCreditWorkshopBlog. How to Use Business Gas Cards to Build Your Business Credit. https://www.businesscreditworkshop.me/featured-2/using-gas-cards-to-build-your-business-credit/
NerdWallet. How to Use Business Gas Cards to Build Your Business Credit. https://www.nerdwallet.com/article/small-business/how-to-build-business-credit-small-business-loans
NerdWallet. How to Check Your Business Credit Score. https://www.nerdwallet.com/article/small-business/how-to-check-your-business-credit-score#:~:text=Your%20business%20credit%20score%20is,important%20to%20monitor%20your%20report.
Nav. How to Build Your Business Credit Fast. https://www.nav.com/resource/how-to-establish-business-credit/
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Vedant Khamesra is the driving force behind product management at AtoB. Specializing in strategic partnerships, SMB solutions, and new product development, Vedant seamlessly navigates P&L responsibilities while leading product execution and strategy. He is fueled by AtoB's mission to empower truckers and fleets with intelligent financial tools and services, making their lives easier and more rewarding.
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