4 Reasons Your Business Credit Score Matters
Small business owners tend to identify themselves with their businesses in ways that can be counter-productive for both. For example, many sole proprietorships often use their personal credit when trying to get business loans. It is important to establish your business as its own entity with its own credit score if you want your business to grow and prosper.
Your Business Credit can be Better than Your Personal
It takes a long time to establish a successful business credit profile. But once that profile is in place, it does not matter what happens to your personal credit. Most business owners do everything they can to avoid damaging the financial profile of their business, and that leads to strong credit. But when you have intertwined your personal and business credit scores, then all of that hard work to make your business strong is worthless.
Your business credit has a chance to be stronger than your personal credit, and that means you can keep growing your business no matter what happens to your personal credit. Separating business and personal accounts and incorporating your business to create a stand-alone business entity are excellent ways to make all your hard work at keeping your business finances solvent worth it.
Your Business has More Funding Options with Good Credit
A business that stands alone with its own good credit is going to get more funding options from lenders. In some cases, you cannot qualify for certain government funding if your business credit score is not strong. A strong credit score also helps you to establish a line of credit for your business that can be used as emergency funding to pay bills and meet payroll. You cannot get a business line of credit without a strong business credit score.
It Matters to Potential Vendors
It is always easier to have credit terms with vendors rather than having to pay cash, and a good business credit score is the best way to go about getting NET terms with new and existing vendors. It is hard to run a business when you have to have cash to pay for everything in real time. When you work to enhance your business credit score, you will have access to credit terms that will allow you to grow your business gradually.
Growth Requires Strong Credit
Before larger corporations take on subcontractors, partners, or new clients, they will often run a business credit check. One of the reasons they do this is a strong business credit score means that you have been focusing on all of the right things to grow your business properly. If you want to grow your business and move to the next level, you need a strong business credit profile.
If you are a small business owner with growth on your mind, then you need to start worrying about your business credit score. Good business credit does not happen by accident. It is the result of years of hard work and fiscal responsibility. When the people you do business with see your strong business credit score, it makes all of those years of hard work and tough decisions worth it.