Tips To Keep Your Business Creditworthy And Build Good Credit
Taking care of your credit standing is extremely important if you would like to start a business in the near future. Statistics reveal that forty-five percent (45%) of small business owners get turned down from creditors simply because of their credit rating. If, by any chance, they are able to get credit, they do not really have the best terms – high interest rates, a shorter payment period, and other payment terms that are not as good as what you would normally expect.
Building a good business credit profile takes a while. Before that, however, you need to start off by building a good personal credit profile. First and foremost, you need to have a good account balance and maintain it. Then, get to applying for credit cards. While you have no control over the result, having an approved result can change the game. Surprisingly, having a credit card can increase your credit rating as banks trust that you can make the payments on time.
If it takes a lot to build a strong personal credit profile, imagine what it would take to build a strong business credit profile. A strong business credit profile does not only help you in securing a loan, it can also help in attracting new businesses. Who knows, you might just get a partnership just by making some well-calculated decisions over the years.
In this article, we will discuss some tips on how to keep your business creditworthy by building a good credit profile. To have a good business credit profile, you need to make sure that you keep in mind the following:
(1) Have A Good Personal Credit Profile
It all starts with you. If you want banks to grant your business the loan, then they need to make sure that the owner is more than capable of paying it off. Typically, banks look for personal credit ratings that are above 600. As mentioned above, building a good personal credit profile takes a while. However, it can be done – that too, very easily. Just remember to maintain a good balance in your account and make payments on time. If you remember to keep these in mind, then you will not have to worry.
(2) Get Credit Beforehand
You may be thinking: “Why should I even apply for credit before I even need it?” Well, that is because you do not want to go running to banks when you actually need it as this will give them the impression that you are desperate. Upon seeing that, they may lose their trust in you and potentially not even give you the credit that you need.
Small businesses may often find themselves struggling to get large credit, so they need to start applying for small credit once the business is up and running. This includes getting a business credit card or applying for a small loan. Of course, be sure to make the payments on time. Once the banks see your diligence, they will offer you credit on their own.
(3) Have Relationships With More Than One Lender
Do not make the mistake of relying on one lender for credit. You need to understand that banks change policies overnight. Tomorrow, they can cut your credit line without you even knowing it. What will you do then? For this reason, make sure to forge relationships with more than one lender. For example, get a business credit card with an international bank and a small loan with a local bank. Trust us, it makes more sense to do it this way.
There are many other tips in which you can make your business more creditworthy, visit businesslineof.credit. And if you’re thinking of getting new business loans, check this article out: https://online.jwu.edu/blog/entrepreneurship-tips-for-getting-a-loan.
How do you build good business credit? We give you useful tips and give you quick guides on how to achieve this. Browse through businesslineof.credit today.