As a business owner, it’s important to understand the difference between your personal credit score and your business credit score.
Personal credit is what you build by showing trustworthiness when it comes to paying your bills on time and in full, from credit cards to automobile loans to home loans. Doing so increases your credit standing.
However, it’s important to remember your personal credit should be separate from your business credit. You can start building business credit as soon as you have a separate business bank account.
What is your business credit score, and how is it measured?
Put simply, lenders want to know how trustworthy a businesses is before they hand out a loan. By building business credit, a small business owner is effectively telling the lender how likely they are to pay back the loan. For more information about how business credit scores are measured, click here.
How to build business credit
There are a number of ways that business owners can build their credit separate from their own personal finances. First off, opening a business checking account is one of the best places to start; that way, business transactions will be independent of your personal ones. Additionally, you should build a credit profile by obtaining a business credit card
Although it may not seem important now, separating your business credit from your personal credit is integral to becoming an attractive candidate for future small business financing. When business owners fail to separate their personal finances from their businesses finances, it can expose your business to credit financial liability.
For more information about credit scores, click here.