Why Building Business Credit is Important
If you’ve recently started your own business, you may be wondering if it’s necessary to start a separate line of business credit. Not only is this step advisable for most start-up companies, it can be vital in qualifying for certain benefits and privileges. There are several reasons why you should consider this important aspect of entrepreneurship and how it will impact your future goals. Here are just a few of them.
Keep Your Business Life Separate
Many people don’t suggest mixing business and personal matters, and credit scores are no exception. Funding your venture with your personal credit line may seem easier in the beginning, but is a choice that can actually have many negative consequences down the road. Start-up companies often need to purchase equipment, product, advertising help and retail space before any revenue comes in, meaning you could have thousands of dollars in loans sitting on your credit file for an extended period of time. This increase in debt can cause your score to drop, leaving you unable to qualify for personal loans for things like cars or a house. Keeping your business credit score separate will give you the ability to retain a high personal score, no matter what happens with your company.
Qualify for Loans and Programs
When you need additional funding for your business, having a business credit score will allow you to prove your company’s credit-worthiness to banks and other lenders. This is especially important if your personal score has suffered damage or is in need of repair. Banks will be able to base their decision off of your company’s track record instead of your personal credit history. This means you could qualify for lower interest rates and increased funding, making it easier to build your business and keep your company running during the initial stages.
Be Notified of Offers
When you have a strong business credit score, you’re often qualified for more opportunities than those with lower scores. Many different types of lenders, from suppliers to credit card companies, will have special financial products that will only be made available to businesses with high scores. While you probably won’t be interested in applying for every offer you’re notified about, there will likely be several opportunities that can benefit you and boost your purchasing ability.
Just as building your company is a top priority in your life right now, building your credit should be high on your to-do list. To build your business credit report and qualify for more favorable terms in your corporate and personal lending, takes the necessary steps to start building your business credit today.