Bad Business credit isn’t something to be afraid of; It’s something that many businesses across the world face and something that we have experience with. Business credit is very similar to personal credit in that it offers you the opportunity to responsibly monitor and manage your business’ debt.
Lenders use this information to make sure that you are eligible for funding and they take a look at your small business loans, lines of credit, and company cards. Just like your personal credit, your business’ credit will benefit from looking good. You can convince investors and banks to give you funding with your good credit, and companies with a nice credit rate are more likely to get better benefits when they’re opening a new account.
A bad line of credit isn’t the best news for a business but don’t be intimidated by it. Business credit is determined by many things including: number of years in business, lines of business credit applied for and established, any collections or tax liens against the business, and payment history to credit accounts.
Brand new businesses might be struggling in these areas and have low to no credit. If this is the case, or if you’re a business owner who made a few credit mistakes along the way, there are solutions! Follow these simple steps to improve your credit.
Business credit is easily built with a business credit card. Keep credit utilization relatively low in relation to the credit card limit and always make payments on time.
Lines of Credit
Lines of credit for your business are similar to business credit cards, but they often have higher credit limits and lower interest rates. Keep the same responsible spending when it comes to lines of credit and, as always, make sure to make payments on time.
Business Loan Management
If you have loans taken out for your business, pay them off early or on time to improve credit. In addition, adding another loan to your load might be good for your credit as well if you can keep up with payments and get accepted.
Don’t Mix Personal and Business
If you’re moving money from your own account into your business account and then taking money back out from your business account to supplement your personal, it can get confusing for the banks who are looking to lend you money or investors wanting to keep track of where their money is going.
Make sure that you aren’t mixing your personal finances with your business finances, as that can affect your credit for both accounts positively or negatively. Either way, it’s not a good idea and you shouldn’t do it!
Bad business credit can put a damper on your business but it’s not something to despair about. The good news is that bad credit is something you can solve. Responsibility when it comes to your credit cards and credit lines as well as your business loans is the most important thing you can do to help with the bad credit of your business.