How To Increase My Credit Score with a Merchant Line of Credit

A merchant line of credit is used as another line of credit to be used for financial and business purposes. It can directly or indirectly affect your credit score as a merchant line of credit functions just like a regular credit line. The following are tips on how to increase your credit score with a merchant line of credit.

  • If this is your first time to apply for a merchant line of credit, you have to understand that the financial institution such as a bank will base your worthiness based on your personal credit score and credit history. A merchant line of credit can add strength to your business portfolio but will not affect your personal credit score.
  • Currently more merchant line of credit gets approved by different banks because they have instituted a measure to minimize their risk by using your business’ credit card sales as the basis for the amount of cash they will release to you. The credit card company will be one in charge of collecting the payments for capital and interest regularly.
  • Apply for a merchant line of credit from a bank or a financial institution which will accept your personal credit score as a valid proof of your good credit standing.  With nothing to base your performance as a merchant, it will be difficult to get a merchant line of credit from other lending institutions.
  • There are retailers which will require you to have a DUNS account before you can transact with them. DUNS stands for Data Universal Numbering System that is accepted and recognized worldwide. The nine-digit number is your identification code that will be used to track your business.
  • Just like any credit line, a merchant line of credit should be properly managed and your bills from retailers should be paid on time and updated. Make sure that you ensure those retailers who utilize your DUNS number do not have any reason to complain. Otherwise you may get reported to the Dun&Bradstreet which the company that manages business credit scores.
  • Use your merchant line of credit regularly to keep it up to date. When you stop or just occasionally use your merchant line of credit your credit score will drop based on the monitoring reports of your credit activities. Make sure that you maintain your business and your credit score healthy with increased merchant line of credit activities. 

Know how a merchant line of credit works. It is like a regular credit card where you borrow money to pay for your purchases and pay interest as well as the principal. Every time that you pay the principal at the agreed time, money is freed and it goes back to your line of credit. A merchant line of credit can be open-ended meaning there is no specific period in which the credit has to be paid in full. Some merchant credit lines have specific beginning and ending period. Choose the one that is most applicable to your financial capability.


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