Establishing business credit is extremely important. You certainly know how your personal credit history can influence your ability to get beneficial loans in future. In the same way, business credit plays a big role in the success of your company. It shows where your business stands financially. Potential lenders, suppliers or investors review your credit report before deciding to do business with you. Moreover, by establishing your business credit history you will protect your personal credit file from any debts that your company may incur. That's why building strong business credit should become your top priority.

An excellent way to start your business borrowing-repayment record is to apply for a business credit card. For those who are going to receive it for the first time, their credit rating will be based on their personal credit history. That's why having missed or unpaid bills will reduce your chances to obtain a business plastic.

A "real" business credit card is a line of credit that is taken in the name of the company. However, there are some companies that offer business credit cards which need a person guarantee. In this case it is not a business credit card, it is a personal plastic which is used for business purposes. So it is you who will be liable for bills and debts, not your company. By ensuring that your credit card is in the name of your company, you can build your business credit and avoid creating problems with your own one.

A business credit card can also build up your company's reputation because you will have the name or logo of your company printed on your plastic. It will give you more credibility even if you have just started your business. Moreover, having a business credit card will give you an opportunity to request free supplementary credit card for your stuff. It will make the tracking of employee spending easier and ensure that the money is spent on official business purposes. If somebody overspends, it will be your company's debt, not your own.

Building a strong business credit history is similar to building personal credit. All your business credit activity, positive or negative, is reflected on your business credit report. It contains your business' payment history, date when you first established your credit, the length of your business credit, existing credit obligations and previous or existing legal filings. There is also basic information about your company, for example the number of your employees, your annual sales, your business address, the type of business you own, etc.

There are 2 main credit bureaus that collect, store and provide business credit information - Dun and Bradstreet, a credit reporting agency that gathers only business data, and Experian, a credit reporting agency that services both individuals and businesses. They gather information from your suppliers, lenders, insurers and other organizations you have existing financial relationships with. They also make their own credit investigations.

Business credit report is an indicator of the "financial health" of your company. It is used to help a lender decide whether or not your company can take on financial obligations and pay them back on time. As long as you make timely credit card payments and stay within your credit limit, you will be building a strong foundation for your business credit. So pay attention to your responsibilities to your suppliers and lenders and don't let your expenses go beyond your business budget.

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Comments

Jason G., 07:18 AM, July 16, 2008
Now I see why I can't get a business credit card with my score :(

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