Understanding Your Business Credit Score
March 22nd, 2009, Written By: admin
Just as you should review your personal credit score and report regularly, your small business credit score is one of the most important pieces of financial information your business has. The business credit score is your financial report card and will determine if and how much credit will be extended to you, and can be the lifeline to a profitable and sustainable business.
Few small business lenders will consider both your personal credit score and your small business credit score, particularly with a young company, but for the most part they are two completely different things. In most cases, major lenders and banks will only consider an established business credit history and will not take your personal credit rating into consideration. In other words, you can a have near perfect personal credit rating and a bad business credit score, and you will not get approved for the loan or line of credit that your business needs.
It is critically important that as soon as a business entity is established that the business begins to build a credit history. This is done just like personal credit:
- Open credit card accounts to establish history
- Use revolving credit regularly while keeping debt ratios low
- Maintain installment loans in the business’ name and make on-time payments
The good news is for small business owners who have poor personal credit scores. This gives them a chance to start over by building and maintaing a high credit score for their business.
It’s a critical piece to your business’ success, no matter how big or small you are. Be sure to think long term and establish a history of repaying your debts so there is now problems in the future when you are ready to expand.
View Your Business Credit Score
Categories: Credit Score Information
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