finance articles businesses business management business marketing Technologies finance accounting Industrial Manufacturing starting a small business Investment health information

The Basics To Business Credit

Building business credit is essential to the financial health of your organization. Using credit cards and loans will help you to improve your credit rating, making it easier for you to acquire loans for your company and to get lower interest rates on these loans. Having strong business credit will be beneficial for your organization as you need loans once and awhile to invest in raw goods, employees, and other needs.

Many individuals will start building their business credit by opening a credit card. This is a simple way to establish business credit as you want to separate it from your personal credit. Start with small loans as this can help you to slowly build up your business credit. Opening vendor accounts will also allow you to start building your business credit. Vendors will report your information to the credit card bureaus so you can establish business credit.

Having corporate credit that is separate from your personal credit is the only way in which you can have the separation that you need for your tax needs. It is also the only way in which you can start building a separate company and to find success in your industry. Initially your company won't be able to establish credit without use of your personal credit. Once you build up credit you can easily get loans directly through the business name.

As you acquire a business credit card you need to get started with negotiation over the interest rate. Anything over 8% is too high to pay so you really have to negotiate with the credit card providers to reduce the rate. If you have a higher rate, make sure you are not carrying a balance on the card. A balance will cause you to pay more money in interest. By paying off the balance each month you will be able to reduce the total amount of money that you need to pay in interest charges. You also need to focus on paying off the balance as it will improve your credit rating. This is a great way to demonstrate to lenders that you can repay your credit card in a timely manner.

Why is it important to separate your business credit from your personal credit? It is important to do this as you want to protect your personal financial situation. If your income is tied to the business it can lead to tax problems but it can also cause you to be personally liable for business debt. In the event that your business fails, you will end up stuck with this huge debt. Lenders will come after your personal assets if you fall behind on your payments, leaving you with literally nothing. Separation of business expenses and personal expenses will allow you to be safe financially. A lot of companies will turn to business credit cards that do not have a personal guarantee. This is a great way to prevent you from dealing with the debts that are tied to the business.

Other things that you can do in order to establish business credit include the following:
- Declare your business as an LLC or separate from your personal income
- Register your organization with the credit card bureaus
- Create a business plan and use it to help you acquire business loans
- Acquire credit from other businesses
- Keep your debt low and always make your monthly payments on time

You need to use your business credit to help the company grow and expand properly. Start with these easy steps so you can create business credit and to protect your personal financial situation.

FREE: Get More Leads!
How To Get More LeadsSubscribe to our free newsletter and get our "How To Get More Leads" course free via email. Just enter your first name and email address below to subscribe.
First Name *
Email *

Get More Business Info
Sponsored Links
Recent Articles


Copyright 2003-2020 by - All Rights Reserved
Privacy Policy, Terms of Use