WHY YOU NEED TO THINK ABOUT YOUR BUSINESS CREDIT SCORE
It’s time to think about your business credit score
We’ve all been there; starting a business, investing your entire self into it (and your savings) to find that when you need to secure finance to grow every door is slammed in your face. One of the pitfalls of working for yourself is the impact it has on both your personal and business credit score. Many entrepreneurs make the mistake of using personal finance to help grow their business, but it’s the wrong move. Not only does it mess up your personal credit, it puts your personal assets at risk if you can’t pay back the loan because your business is struggling or fails.
The need to build strong business credit score should be a priority for every entrepreneur. Of course, it doesn’t help that so many of the ‘big banks’ won’t consider small loans or younger businesses. The good news is there are solutions for the short, medium and long term.
Getting started with business credit
Building and maintaining excellent business credit is critical to the financial success of a company. Like with personal credit, it can open more doors for you to obtain the financing you need to move to the next level. That’s why many companies in the credit and finance business sectors are promoting the use of business credit software, and business credit building programs to build your business credit.
What is Business Credit Software?
A good example of business credit software is Nav. Nav’s business credit software is a free resource that enables you to track your business and personal credit scores in one place. All you need is a DUNS Number and you’ll be able to see your business credit scores from Dun & Bradstreet, Experian Business (and at least two other business credit reporting bureaus).
Nav’s business credit software will enable you to stay on top of your credit activity. You need to keep up with how your activity affects your credit, what you’re doing right, and what you should change. Reviewing this information regularly can also help you catch errors or fraud early on so you can dispute it. The more regularly you check, the more control you will have.
What is a Business Credit Builder Program?
A business credit builder program is a system, or process, of obtaining business lines of credit or credit cards. These credit cards can be obtained from traditional banks, non-bank lenders, and/or retailers that provide business products and services. At FitUFinance we can help you obtain all types of business credit financing for your business, but our specialty is unsecured business line of credit and working capital. Having a realistic strategy for obtaining finance to grow your business is key, using credit builder programs will keep you moving in the right direction.
Building your business credit score is becoming more important, especially since the SBA is requiring lenders to use a combination of a business owners personal and business credit to determine their eligibility for SBA loans under $350,000.
Many people assume because it’s a credit builder program that you don’t need good personal credit. Wrong. Whether you’re looking to establish credit with a supplier, or a credit card, or loan, you need to have your personal credit in order. The ultimate goal is to separate your personal from your business credit, but at the outset it’s not feasible to get business credit without a solid personal score behind you. That said, there are solutions for business owners with less than perfect credit scores but, as you would expect, they are more expensive.
The first step is acknowledging that you need to take care of your business credit score and that means looking at your credit as a whole and putting a plan in place to allow you to separate your personal and business credit.
At FitUFinance we can help get you there, with support and solutions designed with small business owners in mind.
Lisa Rodino
Director. FitUFinance.
Lisa Rodino is Commercial Finance Specialist who helps small business owners and investors navigate the many financing options available to help them grow and prosper.