Too Many business owners are using their personal credit to
finance the launch, expansion or growth of their business. A
majority of business owners have no idea what business is or
how to establish it. By following a few simple steps any
business owner can establishing business credit, therefore,
separating their personal credit from their business credit.
When business owners use personal credit card to pay for
business expenses, the debt of the business reports back to
their personal credit reports which lowers their scores because
their business debts hurt their personal debt to income ratio.
To help prevent business owners from damaging their personal
credit, every business owner should follow the simple steps of
establishing business credit. By establishing business credit
the debt of the business will report to the business credit
file and not the personal credit file. Establishing business
credit will also help the business build a strong business
credit file so loans, lines of credit wont require the business
owner to sign a personal guarantee.
Here are just a few reasons why every business owner should
establish business credit.
1. Establish creditability. You cant expect to walk into a bank
and ask for a business loan with no business credit or business
history. By establishing a good business credit profile you
will be able to secure the financing your business needs.
2. If your business should fail, you would still be legally
responsible if you used your personal credit to finance your
3. Saving money. Thats right, business credit rates are
typically lower than personal credit rates. A few percentage
points in interest mean thousands of dollars in the long run
4. Float your business through tough times. Even though
everything make be going great currently, you never know when
your company will take a turn for the worse or when economic
times might change. By establishing business credit you will be
prepared for the down time.
5. Get the money you need. Lets face it, without the money you
need to finance the launch or expansion of your business you
really wont be in business at all. Dont make the mistake of
using your personal finances to finance you business.
The are many, many more reasons why you should establish
business credit. We have all heard the saying, “keep business
expenses separate from personal expenses,” right? The only way
to do that is to set up your business properly in the first
place by establishing business credit.
If you are interested in learning…
-What rights does a business owner have if there is incorrect
information on a credit report?
-How do I obtain a business
-What do business lenders look at in order to
extend business credit?
-Where do you find companies that grant
-Which companies report to the business credit bureaus?
-What credit cards companies do not require personal
Then I suggest you start the education process of learing how
to establish business credit!