It’s safe to say that having good credit makes life so much easier for people whether they own businesses or not. Things from buying your first car to getting funding for personal or business reasons all depends on good credit which is why these days you can’t get by easily if your credit score is less than perfect. Business owners generally know how important having good credit is and would do their best to make sure that they don’t ruin it by keeping their personal and business credit expenses a part but sometimes they can overlap. For those who are new to the business world here are some reasons as to why having a good credit score could have a positive impact on your business.
Easy assess to more capital
If you want to get a certain amount of funding for your business a variety of factors are put into place to determine your qualifications which includes your credit score, reasons as to why you need the funding and what you can offer as collateral. It is a fact that poor credit can affect a business’s chance of getting funding therefore building a good credit score is a must if you want to raise capital or buy new equipment or do any other activity which requires funding to do so. Some of the ways to do this is by of course paying your bills on time and also borrowing from lenders that report to the top 3 credit report bureaus Experian, Dun & Bradstreet, and Equifax. Being a business owner puts you in a more advantageous position compared to a consumer because you have assess to more the ten times the number of financing.
Getting better interest rates
With good credit comes the perk of getting lower interest rates on the borrowing amount you’ll owe. This is a sign that lenders have full confidence in your ability to repay back the funding amount so there will be no need to charge you a higher interest rate. The higher interest rate will increase the overall cost your business would have to cover later on too making having bad credit expensive. Paying your balances on time as well as lowering your debt is some of the ways you can save your business money in the long haul.
Taking advantage of trade credit
Trade credit is the ability to buy what your business needs from suppliers and vendors and pay back later. It is worth mentioning because trade credit coupled with a good credit score allows you to have easy access to the resources you business needs like equipment, materials inventory and other needs and on top of this lets you have a longer repayment time too. Like lenders vendors and suppliers will believe that you’re more than capable of repaying them on time and the more often you take advantage of this you can actually better your credit score through trade credits. Your Dun&Bradstreet Paydex score will let them know where your credit ratings stand. Keep your regular payments punctual to better your chances of getting assess to this benefit.
Improving your credit score is not easy but overtime the more effort you put into it the more windows of opportunity will open for you in terms of funding for your business which increases your chance of success. Good credit is essential but if you have less than perfect or bad credit it is not the end of the world for your business because there are alternative options you can take advantage of when it comes to getting funding and those options can help you even with poor credit one of them being cash advances though it varies per lender. If you continuously work on improving your credit within the next 6 months you’ll see better days for your business in terms of financing.