Why is business credit important? Without it, many of your most crucial business dealings are at risk. The lines of credit you use for starting and growing your company can be very expensive. Having easy access to credit makes your company's finances more stable. It helps to attract new customers and gives them a means of making their payments directly to you. Credit can also help you expand and take on other clients.
But what does it mean to have good business credit? It means you are less likely to be declined for a loan from a supplier. It means you can expand easily. It means you are more likely to get your hands on financial support when you need it. It can even help you secure better credit rates when you decide to buy a new home, buy a new car, or obtain credit to open a new business.
Having a good business credit score means you have a solid financial future. A low one will give lenders and other financial institutions the idea that you are less than reliable. If you have a low one, you are more than likely going to have trouble getting loans or other forms of financial backing for your needs. Even some well-established companies can suffer serious losses if they are not able to borrow from reliable banks or other financial institutions. That is why having a strong business credit score is extremely important.
In today's tough times, a low business credit score can make securing financing much more difficult for small businesses. Lenders will typically only provide small businesses with the funds they need on the condition that they can show they have an excellent chance of being able to repay the loan. This can be very difficult for many small businesses. When this happens, they may have to shut their doors for good. If you do not have a solid record of on-time payments or timely pay-offs on your past financial obligations, you may have difficulty securing any type of financing to help you start establishing business credit.
To get around this problem, you can use a social number called a SIN. You can get one by signing up online, but it is also possible to get one from your employer, when you ask them for a copy of your social security number. The social number you use should match the number on your business credit score report, at least to some extent. This makes it far easier for a lender or other financial institution to match you with a potential lender and make your financing options more open and flexible.
When you work with a SIN that is similar to your trade credit score, it can reduce the SIN's effect on your finances. Even if it is still inferior to your trade score, it may save you enough money in interest costs over the life of the loan to make it a better deal than an unsecured commercial loan. This is why many small business owners turn to working with lenders who do business with SINs exclusively and use their combined scores to help them secure small business financing. By using a lender who exclusively works with SINs, you have a much higher chance of success because lenders know they will have complete information about your past financial history before they ever meet with you. This helps them to assess you as a serious business owner with a solid payment history and credit history.
There are also other ways that your credit score can affect your ability to get small business financing. If you have a low score, you may find it nearly impossible to obtain a traditional line of credit, such as a home equity loan, a merchant cash advance, or even a . . . . . . business credit card. This is because banks and other potential funding sources may view you as a risk based on your low score, and therefore they may be unwilling to loan you money. Instead, they will typically focus their attention on potential borrowers who have a higher score, which increases their likelihood of being able to provide a valuable loan to small businesses. This is one of the reasons why it is especially important for new small businesses to work quickly to raise their scores so that lenders will consider them for more credit opportunities in the future.
Small business credit scores come in all shapes and sizes, but they are very important to your success as a small business owner. Lenders use your Equifax credit score to determine whether or not you are creditworthy, and the majority of financial institutions use the Equifax credit score to determine what the interest rates on a loan will be. Because it is so important to your financial future, it is vital that you take the time to make sure that you are managing your personal finances well. If you do not currently have an Equifax business credit score, there are many resources available to assist you in getting started or raised to a high score.