The benefits of business credit
In the Business Credit section, you can find the five steps you can take to establish and build good business credit.
In short, you’ll need to [legally create] a business entity. Then, you’ll have to open accounts with companies that report your payment history (such as on-time, ahead of schedule or late bill payments) to the business credit bureaus. If you have a line of credit or credit card, only using a small portion of the money you’re allowed to borrow and consistently paying it off could help your business credit.
Establishing a good business credit history could help your business:
- Qualify for higher loan amounts and lower interest rates when borrowing money
- Pay less for business insurance
- Receive better agreements with suppliers
If you don’t build business credit, you may be able to use your personal credit to borrow money for your business. However, your personal savings and possessions may be at risk if you can’t afford to repay the money you borrow using your personal credit. Additionally, using your personal credit for your business could make it more difficult to qualify for a personal loan, such as when you want to buy a vehicle or home.
Whether you rely on your business’s credit, your personal credit or a mix of both, you might consider three ways to borrow money: a credit line, a loan or a credit card.