Unfortunately, it can be very difficult to avoid tangling up personal and business finances, as many business financing options still require you to provide a personal FICO score. As with your personal credit scores, it’s important to check credit checks your business credit scores regularly, as credit bureaus can make mistakes or have incorrect information about their reports. The way they see it, the higher your credit scores, the greater your chances of paying off debts on time.
The information communicated can help set up a new profile or strengthen an existing profile by offering additional business activities. Monitoring your business credit can help you better prepare for business growth opportunities and avoid surprises when you go on loans. In general, it is recommended to check your business credit report and score for at least three months before you get a small business loan or line of credit. That way you can make sure everything is in order and see what improvements you can make.
Once they do, you’ll need several months of on-time payments to establish a good business credit score. Whether you have a new business or a business that is well established, if you take the steps above, you may be able to establish a good business credit rating within a few months to a year. Personal and business credit scores are available through a variety of online sources. With personal credit scores, it’s a legal requirement that credit bureaus provide you with a copy of your credit report for free.
Score rangeSypic measured between one and 100.Usually measured between 300 and 850.AvailabilityCompany credit scores are available to the public. Getting a small business credit card and paying the balance each month is a good way to build a solid payment history, which is one way to build your business credit. If you have a good personal credit score, at least 670, then you may qualify for some of the best business credit cards.
Anyone who wants to know a company’s credit scores only needs to pay a one-time fee to gain access. Increase the likelihood of access to additional funding; either in the form of mortgages, credits or loans. Before you start entering into negotiations with a new supplier or customer, it’s important to understand your existing credit score. The easiest way to do this is to evaluate your company’s credit report, as it contains all the information you need.
Having loans, credit cards, and checking accounts with vendors in your report (with timely payment histories) can help your credit scores. You can ask providers which business credit bureaus they report to, if applicable. Bad credit reports track your business wherever you go and can certainly work against you and your ability to do business.
Having great personal and business credit scores can help your business in many ways. You can save money on insurance and have more time to pay your providers. You may also be able to borrow more money at a lower interest rate from lenders and credit card issuers. There are consumer and business credit scores based on consumer and business credit reports.
The most impactful aspect of corporate credit is its ability to secure financing. If you have bad credit, you may not be eligible for loans, credit cards, and other types of financing. This can be catastrophic for a new company that is on the verge of growth. However, according to Nav, 82% of small business owners don’t know how to interpret their business credit score.
Small business lenders rely on business credit scores from multiple credit rating agencies to decide whether or not to lend to small businesses. The business credit score also helps lenders determine the size of a loan they are willing to make. Lenders look at factors such as whether your company has paid off previous debts on time, how quickly you pay suppliers, and how much revenue you’ve generated over time. Many small business owners try to avoid mixing personal and business credit cards and lending strategies.