Raising Your Personal Credit Score to Establish Business Credit

If you are the owner of a business, does it truly make a difference if you have a low credit score? Do you really need a good credit score to build a separate business credit history? What if your personal credit needs improvement? How can increasing your score affect your business financing opportunities?

Your Personal Credit History and Your Business

If you have just started your company and have yet to establish business credit, loan companies would use your personal credit rating to see whether or not you are credit worthy. For example, if you’re applying for a small business credit card, the issuer would first inquire into your credit file prior to approving your application. The same is true when applying for loans from banks or private lenders.

Therefore, your odds of getting approved for a business loan or credit card will depend on your personal credit. Of course, if you have poor FICO score, prospective lenders might immediately consider you as a high risk customer and may reject your application. Nevertheless, there are loan providers who do offer bad credit financing, these frequently include high interest rates and fees. On the contrary, a good credit rating gives you the chance to get quick approval and better deals.

Should you postpone until your credit score improves before applying for a loan or small business credit card? If it's possible to delay submitting your loan application for the next 6 months, fixing your credit would surely make a big difference. By paying your bills on time, you should be able to see an improvement in your credit history after a couple of months. Indeed, boosting your personal credit can really make or break your plans of seeking financing assistance for your small business.

Establishing Your Business Credit

After improving your personal credit and getting approved for a business credit card, what’s the next step? To start building your business credit history, register first with a major business credit tracker like Dun & Bradstreet. As soon as you’re registered, your payments to your business credit card will be recorded.

The key to building good business credit is using your credit card regularly and submitting your payments on time. Closely monitor your business credit card account and make sure that all charges made are officially business purchases.

After a few months or a year of consistent credit card use, order a copy of your business credit report from D & B. By building the foundation of your business credit, you are also preparing your company for bigger and more challenging projects that may require you to apply for a business loan.

Irish Taylor is a bussiness loan consultant with Startup Business Loans and has been providing consumers and business owners with startup business financing since 1992. For years she has helped people with credit and loan problems especially pertaining to business start up, SBA loans and Unsecured loans.

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