Why is Business Credit Important For Your Business & How is it Calculated?
If you’re new here, welcome to our educational series on Business Credit, created just for business owners like you. Lesson 2 starts below – see Lesson 1 here
Lesson 2: Why is Business Credit Important?
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Why is Business Credit Important For Your Business & How is it Calculated?
Do you really need to worry about your business credit score? Even if you’re a brand new business?
And even if you don’t expect to need credit any time soon?
The answer to all 3 of these questions is YES.
If you’re a business owner, understanding business credit and what it means to your business should be one of your top priorities.
As we touched on in part 1 of our educational business credit series, your business credit score determines how “fundable” your business is and plays a large role in your business finances and credibility.
Don’t forget, your business credit score and report ARE publicly available information that literally anyone can access.
Plus, even if you don’t see yourself wanting or needing to access credit through your business, it’s a resource that takes time to develop, and one you’ll want to build before you need it.
What if you are not currently looking for financing?
At the end of the day, your business credit score shows how trustworthy your business is financially.
If you don’t currently need funding or financing, and you haven’t yet taken the time to understand and build your business credit, that’s great! That means that now is the perfect time to start working on your business credit.
You wouldn’t want to be in the position of needing funding right away, without having established your credibility as a business.
You may have heard the phrase, “The best time to plant a tree was 20 years ago, but the second best time is now,” and the ancient Chinese proverb rings true.
This is even more of a reason to take the initial step to build the trustworthiness of your business from a lender’s eyes. By not having a current need for funding you have the luxury of time, securing financing before you need it or when you don’t need it.
What if your business credit hasn’t been an issue for your business yet?
It is great if you have been able to grow your business to the current point by self-funding or have it affected you from securing a lease for the location. However, chances are there will come a time when your business credit score becomes a factor.
Did you know, some of the purchases that are being made by your business can be used to build your business credit?
No matter the industry you are in, there are vendors where you can secure initial credit with that will build your business credit score for purchasing the same items or covering essential expenses the business is already paying to operate.
