A strong credit score is the key to growing your small business. Not only does it stand for the creditworthiness of your business, but it can mean the difference between financial success and business failure. Here’s what you need to know about your business credit score:
What does your credit score mean?
A business credit score is the rating of your ability to repay your debts. Many small business owners start out using their own personal credit, but it’s important to establish a credit history in the name of your business. Good credit can also ensure you get financing when you need it. Suppliers may even evaluate your credit when deciding how much credit to give you, so a good score often means you’ll qualify to get the materials you need under the most favorable terms.
How does business credit differ from your personal credit?
Your business credit report and score are completely separate from your personal credit report and score. While a business credit report displays the same type of information as a personal one, it includes specific information about your company’s debt repayment, public records, and business owners or officers. Unlike a personal credit score, anyone can look at your business credit report. This includes potential customers, vendors and clients.
What does a good credit score look like?
Generally, a good business credit score is considered 75 and higher, with scores ranging from 0-100. Many factors go into a credit rating for businesses including payment history, industry, revenues and number of employees.
What can I do if my business credit score is not so great?
The most crucial way to improve your credit score is to pay your bills on time. Be sure to also monitor your credit file closely and be aware of any changes before they begin to affect your relationships with clients, customers or financial institutions. Begin to build your credit by borrowing from lenders that report to credit bureaus and keeping your public records clean.
Having good business credit helps you secure lower-interest loans, credit cards and the best possible terms from your suppliers. When you stay in the know and monitor your credit, you’ll appear trustworthy and stand out among competitors.