Developing the right fiscal habits enables you to establish a good credit score for your business. These habits include paying bills promptly and in full, eliminating existing business debt, taking care of any tax liens, and frequently checking your company credit report. Here are some of the advantages of using these methods to build a strong business credit score.
Receive Funding for Growth
It is likely at some point you will want to expand your business, and if you establish a good credit score you will be able to finance this by obtaining a line of credit or a loan. Lenders are reluctant to approve loans for companies with low credit ratings, but if your credit score is high, you will receive financing much quicker and easier.
Obtain Favorable Terms for Loans
With a strong credit history not only will you be able to qualify for funding, but you will also obtain better terms. This can include higher limits on your credit and reduced interest rates. Your company will be able to borrow more money while at the same time save significantly on interest.
Purchase Supplies on Credit
When your credit rating is excellent, suppliers will be more willing to extend credit to your company. This will make it easier for you to purchase the inventory and equipment that you need to grow your business and also keep your cash flow strong and steady.
Safeguard Personal Finances
If your business has good credit, you can more effectively keep personal and company finances completely separate. This means that your personal credit score will remain unaffected by any fluctuations in your business fortunes, and your business will remain safe even if you face personal financial difficulties. It is best to follow sound fiscal habits both personally and professionally, though, as some lenders may check both.
For more advice on how to establish a good credit score, get in touch with Lode Capital.