Most people understand how crucial personal credit is, especially those who have gone through the loan process, whether for a house, a car, or anything else. But unfortunately, most business owners do not realize just how important Business Credit is.
A company’s business credit shows how well it can pay off its business debt. Having a high business credit score shows others that your business is legitimate and can be trusted with loans and investments. On the other hand, having a low Business Credit score comes with its own set of disadvantages.
We talked to Web Finance Team and asked them to give us a rundown of these disadvantages that we could share with you. The Web Finance team consists of consultants and business experts who offer an entire catalog of business solutions and have helped many businesses get their cred on track.
One of the most important reasons the Web Finance Team pointed out was that anyone worth your time would check your business credit. If you have low credit or no history, it may be a turn-off for many potential lenders, investors, etc.
Anyone who wants to get involved with your business will want to see a high business credit score, and if you’re using personal credit (like many small businesses are), you are at a disadvantage.
As the Web Finance Team mentioned above, having a good credit history will garner your business more opportunities. If you have a high credit score, you will be more eligible for small business loans and business financing products.
On the other hand, it will be challenging to secure financing, especially advantageous funding if you have low credit. It will also make obtaining financing much faster, and time is money in the small business world.
If you need to expand, getting a loan quickly, with a reasonable repayment plan is crucial.
Not only will you be able to garner financing easier, but the financing will be of higher quality. As a result, you will get better, more flexible payment plans at a lower interest.
Having lower payments means you can put your money towards growing your business. But unfortunately, businesses with low credit scores will be forced to take whatever financing they can get instead of funding that actually benefits them and their business.
Banks and lenders are not the only entities that will check your business credit. Suppliers and vendors will also reward businesses with a high credit score since these businesses are more trustworthy.
If you have a high credit score, suppliers will be more willing to work with you. Having a good relationship with vendors and suppliers will come in handy when restocking or making significant purchases for your business.
High credit utilization is not suitable for your score. This means people should avoid using their personal credit to make large purchases, such as those typical in business.
Many small business owners use their personal credit instead of opening a business credit line, which many experts agree is a huge mistake. Using business credit will protect your personal credit and keep your business and personal finances completely separate.