To build your business credit can be an important factor to many new and growing businesses. Here are a few tips for establishing, building, or improving your business credit.
Steps to Building Your Business Credit:
- Start with your personal credit. The most important factor when trying to establish business credit is your own personal credit history. For new businesses, lenders will often look to the business owner’s personal credit history. If you have a bad credit score, a history of late payments, etc., this is going to negatively affect your ability to get credit for your business. In fact, many lenders will require a personal guarantee if the businesses itself does not have a credit history. It can be particularly challenging for minorities, immigrants, and women to establish credit and obtain funding for a new business. So if building credit is important to your business, make sure your personal credit looks good first.
- Start Early. Much like personal credit, the length of credit history is going to impact your business’s credit. If you can open a business credit card or open a trade line with suppliers. Try to do it as soon as you can. There are a lot of options for obtaining credit as a new business. Having a long history of available credit and on-time payments is going to have a positive impact on your business’s credit.
Business credit is a lot like personal credit. Anything you would do to build your personal credit will be equally beneficial in building business credit. Having good credit for your business will allow you to obtain lower interest loans, credit cards, and better terms with your suppliers.