BUILDING BUSINESS CREDIT
Business credit score measures how likely it is that a business will be able to repay its debts if granted credit. If you approach someone for a business loan or business credit card, they’ll use your business credit score and, in some cases, your personal credit score as well to decide whether or not your business is creditworthy. The use of lenders using your personal credit score to determine your business credibility has become very common over the years. As most lenders believe if you can’t pay your personal debt, the risk of you defaulting on your business financial obligations would be quite high.
HOW DO YOU BUILD BUSINESS CREDIT?
I have put together a guide to help you establish excellent small business credit from registering your business with your Secretary of State to get your EIN number all the way to getting auto loans in your business name.
- 1. Access to Cash Flow and Financial Flexibility - Business credit cards and loans can provide a simple way to purchase the equipment, supplies, or inventory that you need.
- 2. Tracking Expenses - If you only make purchases using your business accounts—checks, credit, or debit cards—you'll be able to easily track those expenses
- 3. Business Loans – Lenders will be more likely to give you the money you need to purchase new equipment or expand your business
- 4. Financing Capabilities – Creditors regularly offer a fairly low-interest rate. Some business credit cards offer a zero percent interest rate for a certain time period.
- 5. Large Credit or Spending Limit - business credit cards will offer higher credit or spending limits than personal credit cards do.
- 6. Control of Employee Spending - If your business has employees who travel, make purchases of inventory or supplies, or have other responsibilities (Trucking, or Construction) that require them to spend company money, a business credit card can help you to keep tabs on exactly what they are buying, and how much they are spending