7 Captivating Reasons to Establish Business Credit in 2019

7 Captivating Reasons to Establish Business Credit in 2019
Caitlyn Rose
on February 18, 2016
Read in 1 min

Applying for a loan or line of credit with a bank requires a vast amount of financial verification.

Some small businesses these days are applying for non-traditional and alternative lines of credit.

There are even more options for business loans, but here are seven good reasons to build business credit in 2016.

Keep Your Personal and Business Finances Distinctly Separate

This is one of the most important steps you can take to protect your business and save time with bookkeeping.

Provided that you establish credit in the name of your business, there will be a clear difference between your personal and business finances in the eyes of the law.

You can be held responsible for company debts if the distinction between your business and personal expenses is unclear.


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Protect Your Personal Credit Report

As you build business credit, keep in mind that there are many credit sources only reporting to your business credit report.

It’s essential to protect your personal credit report along with your businesses credit report.

Build a Credit Identity for Your Business

By creating an identity with major credit reporting agencies, your business will establish its own credit history, ratings, and scores.

When you have a credit-worthy company you will gain better access to lenders.

Protect and Improve Personal Credit Scores

Credit scores are a big deal.

The benefit for putting your business purchases on a business credit card is that your business credit card’s activity only reports on your business credit report, not your personal credit report.

This ensures that any balances on your business credit card do not affect your personal credit scores.

Limit Your Personal Liability for Business Debts

Building credit in your business’ name will ensure that you limit your personal liability for the business debts you are charging.

If you were to use personal credit for your business, creditors could hold you personally responsible for the debt.

Make Your Business More Attractive to Lenders

During the credit application and approval process, the account history that is being established will get added to your business’ credit report.

Your business’ credit will be evaluated as lenders determine whether or not your company is creditworthy.

Establish a Business Credit Asset

Establishing a business credit asset will ensure that small business owners are able to take action that will affect future growth.

This will help your business establish good management habits and obtain needed resources.

Building business credit is an extremely important aspect of running and maintaining a successful business.

Credit reports and scores play a key role in obtaining the necessary funding needed to operate your business.

Caitlyn Rose Finance Journalist

Caitlyn is a business consultant and writer with an intimate understanding of business finance.

An entrepreneur at heart, she supports small local businesses whenever she can.

Lendio
Headway Capital

Important Disclosures. Please Read Carefully.

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The lenders and lending partners you are connected to will provide documents that contain all fees and rate information pertaining to the loan being offered, including any potential fees for late-payments and the rules under which you may be allowed (if permitted by applicable law) to refinance, renew or rollover your loan. Loan fees and interest rates are determined solely by the lender or lending partner based on the lender’s or lending partner’s internal policies, underwriting criteria and applicable law. Lendgenius.com has no knowledge of or control over the loan terms offered by a lender and lending partner. You are urged to read and understand the terms of any loan offered by any lenders and lending partners and to reject any particular loan offer that you cannot afford to repay or that includes terms that are not acceptable to you.

Late Payments Hurt Your Credit Score

Please be aware that missing a payment or making a late payment can negatively impact your credit score. To protect yourself and your credit history, make sure you only accept loan terms that you can afford to repay. If you cannot make a payment on time, you should contact your lenders and lending partners immediately and discuss how to handle late payments.