While it’s essential to know the business credit of other companies, it’s also important for small business owners to stay on top of their own business credit, too.
Bottom line—good business credit gives you many advantages:
- better lender terms
- business confidence and credibility
- lower credit card interest rates
When you are checking your business credit, it is also essential to check on your personal credit. Depending on the structure of your organization, your personal credit may have relevance to your business credit. As a small business owner, you might have to guarantee loans and credit lines for the business. Because of this, you want both your business and personal credit scores to be as strong as they can be.
Why is it important to check?
It is essential to check company credit and your business score to make sure it is where you think it should be and that no mistakes or fraud exist.
Sometimes a business can get cross-matched with another with a similar name or location, and if that business’s credit is bad, it can show up on yours. You’ll want to monitor and check the credit report for your business at least a few times a year.
One of your business goals should be to establish positive credit over time. For the above reasons, you want good business credit to make you a more credible company and to give you access to higher credit limits and lower interest rates.
What can you do to establish good credit as a new business?
When you are starting out as a new business owner, it is vital to establish your credit as well as to monitor it. You have to be careful not to create delinquent credit, but you do want a business credit card. Always make your payments on time or even early.
Some other things you can do establish good credit are:
- Open a business bank account. You will pay your business bills and receive payments here.
- Get a business phone and register it under your business name.
- Apply for a federal employer identification number.
Not only will these things help establish your business credit, but they will also demonstrate that your business is professional and trustworthy. Business accounts, cards, and phones all add to that professional image that your customers and business partners will appreciate.