The chances are that you’ve heard the term “credit score” before. However, if you thought it was only important for your personal life, think again. Countless companies access at least some kind of debt financing to help them expand their services and grow their business.
In 2018, experts from across the financial world agree that it’s important to try and keep your business and personal finances as separate as possible. One way to do that is to make sure that you develop a separate credit score for your personal, and business life.
How to improve your business credit
Establishing business credit is simpler than you might think. Before you even start the process, it’s worth obtaining a few copies of your current reports, including any information you might have about your business loans. Not only will that let you know where your debt ratio stands, but it could also help you to see whether you need to find out how to claim PPI compensation. Remember, PPI was mis-sold on business loans just as frequently as on personal loans.
Once you know what your business credit score looks like, you can implement the following steps to improve your strategy.
- Establish a separate legal entity for your business
Whether you’re just launching your company for the first time, or you’ve been the sole proprietor of your business for a while now, this is an important part in making sure that you have a solid credit foundation in place. If your business isn’t legally separated from your finances, it can damage your personal financial health and put both your credit scores at risk.
- Apply for a credit card and use it
Once you’re sure that your business and personal finances are separate, get a business credit card for your company. That will help you to start building up your business credit, and you’ll also be able to tap into some great benefits too. Business credit cards are incredibly versatile and come with things like travel benefits, cash-back rewards, and sign-up bonuses.
- Pay your bills on time
Whether it’s a personal credit score or a business credit score, one of the best things you can do for your financial health is make sure that you’re paying all your bills on time. Look at your payment due dates and if one of your dates falls at a complicated time, talk to your creditors about moving it to another day. That will help you avoid any penalties.
Making the most of your business credit score
In many ways, a business credit score and a personal credit score are two very similar things. They provide loan issuers, credit agencies, and suppliers with an insight into how trustworthy you are when you want to borrow money. Having a strong business credit score means you don’t have to rely on your personal credit for risk management purposes.