The Benefits of Having a Good Business Credit Score
If you want to apply for financing to afford necessary expenses like the ones we mentioned, you’ll need a decent credit score. Most lenders will consider your credit score when reviewing your application, so it is imperative that you focus on improving or maintaining your score, depending on your current standing. Even if you you do get approved for financing with a low score, you’ll likely receive worse terms than a business with a high score.
To gain an understanding of the top benefits of having a good business credit score, keep reading!
Easier to Qualify for a Loan
One of the biggest advantages of having excellent business credit is the ease in which you can qualify for a loan. Lenders are hesitant to lend money to businesses with poor credit history, for fear that they won’t be able to make their payments on time, or at all. As a business with an exemplary credit score, you’ll likely be able to get a loan quickly and painlessly!
Better Loan Terms
To expand on the last point, once you qualify for a loan, lenders will consider more favorable loan terms for businesses that have proven their credit-worthiness. For example, you could leverage your great credit score to negotiate much lower interest rates and larger credit limits. Better terms can greatly benefit your business. For instance, lower interest rates will save your business thousands of dollars in interest payments!
Protects Personal Credit
With business credit, you can separate your personal and business financial obligations. Your company debts will be reported on your company’s credit reports, saving your personal credit rating from being impacted from any financial woes your business may face, and vice versa.
More Favorable Terms from Suppliers
Once you’ve established great business credit, not only will this help you when you seek loans from financial lenders, but it also bodes well for the credit terms provided by suppliers.
When it’s time to purchase additional equipment and inventory, consider purchasing on credit. If your suppliers can trust that your business is financially stable and capable of repaying debts in a timely manner, they’ll be more comfortable in forgoing prepayment and allowing you to purchase on credit.
Access to Cash for Growth and Expansion
Even if your business can meet its current financial needs without credit, what happens when you decide to take your business to the next level? For instance, having the ability to take out a loan for a business expansion project will allow you to grow your business larger than initially imagined. Whether the expansion involves new facilities, equipment, or inventory, a loan can help you get started.
Overall, it’s evident that there are many benefits to having a strong business credit score. Whether you own a new business or a well-established operation, it’s important to build your that credit score so that you can pursue business success for years to come.
Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author's alone, and have not been reviewed, approved, or otherwise endorsed by any of these entities.