Business Credit Reports 101
If you’ve ever taken out a loan or applied for a credit card, you already know how important your credit score is. However, as a business owner, you need to pay attention to a bit more than just your personal score if you want to achieve financial success. Your Business credit is a vital part of your company as a whole, and you need to understand the numbers and what they need if you want smooth sailing in the coming years. This score can be a bit complicated, but with a little research and the right resources, you can get a thorough grasp of your financial situation in no time. Consider the following when it comes to understanding your score:
Why It’s Important
The formation of your business credit results from use of a business credit card and other borrowing, much like your personal credit score. Like your personal score, your business score can be used by lenders to determine your reliability as a borrower. A high score results from good financial practices, and can help you secure larger loans with better terms, while a low score can inhibit your ability to obtain bank funding, and even negatively impact your relationship with other businesses and partners.
What is it Based On?
The measurement of your business credit score varies depending on the credit company analyzing the information. However, there are a few key factors that consistently come into play when calculating your score, and which are extremely important to maintaining healthy business practices. These include the number of accounts your business claims, the amount of credit you’re currently using compared to the amount of credit you have available, and the timeliness of payments of all sorts.
How is it Different From Personal Credit?
The way your business score is measured is very similar to your personal credit. However, there is a big difference – the range of the scores you’ll encounter. While the average personal credit score ranges from 300 to 850, business scores only range between 0 and 100. It’s important to keep this in mind in order to avoid confusion when you receive your score from one of the qualified analysts.
Keeping your business credit high and healthy is a must if you want your business to live up to its full potential in the coming years. If your score is low, it may be worth it to meet with your lender or another financial professional to identify the issue that’s bringing your numbers down, and work on a plan to remedy the situation.