Most of us know the importance of having good personal credit; it makes it easier to purchase a home, rent an apartment, get a car lease and in some cases, get a job. But, did you know that when you have your own business, there are a whole other set of credit scores and reports to think about? These other reports are based on your business and are generated in pretty much the same way as your personal credit report. What comes up in these reports will impact on your ability to get business funding, which is why if you’re about to open a new small business, doing everything you can to build good business credit as early as possible is imperative. Here are some of the top reasons why it’s so important to build good business credit.
#1. Secure Loans from Top Lenders:
Once you begin searching for what’s available when it comes to business funding, you’ll probably notice that the options are endless. There are over forty types of different financing options that you might want to consider when it comes to business funding, and in the past two years, over one hundred online lenders entered the market. You will probably find that some offers are a better fit for your business compared to others. And just like personal finance, lenders prefer funding businesses with good credit, so having an excellent credit score will give you more choice when it comes to who you’d prefer to work with. Check out Become.co where you can find a wide range of different funding options tailored to your business and learn more about improving your funding odds.
#2. Access Larger Funding Amounts:
Finding a good quality lender isn’t the only thing you should be concerned with when getting business funding – having a better credit score also means that your business is more likely to be approved for larger amounts of credit. The amount of capital that you will qualify depends on a number of factors, including your existing collateral, the purpose of the loan, and of course, your business credit score. Lenders will typically look at both your personal and business credit scores when determining how much you will be eligible for.
#3. Get Better Interest Rates:
Often it can feel like a victory when getting any funding at all, but it’s worth bearing in mind that not all business loans are created equal. Before you agree to a loan, double-check that you are getting the best possible interest rate available to you. Getting the best rates isn’t easy, though – the key component here is having a good credit score, and both your personal and business scores will be taken into account. The short version: the better your business credit score, the lower interest you are likely to pay. In addition to giving you a better chance of getting the best business funding, improving your business credit score will protect your personal credit score. It’s essential to keep your business and personal finances separate so you don’t end up using your personal credit to secure financing.