A Closer Look At the Importance Of Having Business Credit

Maintaining good credit for your business couldn't be more important if you want your company to be a success, this is where FairFigure comes in

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If you’re launching a new enterprise from scratch, you need to bear many different factors in mind. From hiring employees and selling products to creating marketing materials and planning a budget, it isn’t hard to see why business credit may be left on the back burner as you concentrate on other, seemingly more important, factors.

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Nevertheless, maintaining good credit for your business couldn’t be more important if you want your company to be a success. This is where FairFigure can prove to be invaluable.

Business credit: An overview

Similar to personal credit scores, a business credit score will determine whether or not your company is trustworthy when handling its finances. The credit score that your business achieves is a gauge for your company’s reputation.

It reveals any delinquent payments your business has in its history as well as any episodes of bankruptcy that could negatively affect the chance of forging future working partnerships with other organisations.

When your company has a poor credit record, potential investors or lenders may decide that you aren’t worth the risk of partnering with as your business could be a risky endeavour. This is why it’s so important to use a service like that provided by FairFigure to keep an eye on your business’s credit history so you can be up-to-date with your score.

Protect your own credit score

It can be tempting to take out a personal loan to cover your business-related setup costs. That isn’t a good idea, though. You may well have an excellent credit score as an individual. However, putting a business loan in your own name is a bad idea as you could end up being held liable for any debts your business accrues.

No matter how promising your enterprise looks, any company can go through challenging times. If your company ends up being unable to repay any loan it has taken out, that debt could be reflected on your personal credit file and that would be very bad news for you as an individual. It’s also important to be aware that in an extreme case your creditors may pursue your own personal assets when you take out a loan in your name.

Therefore, it’s best for you to build up good business credit so you can make applications for business loans using your company’s own credit report. Your company’s own credit report can only remain healthy if you make the right financial decisions for your business, though.

For example, making too many applications for credit in a short space of time can lead to a dip in your credit score, and that’s likely to happen if you don’t know which lenders are most likely to extend credit to your company.

FairFigure’s services can help with this. We can take all of the guesswork out of knowing which lenders to choose with credit monitoring and financial planning strategies and insights that you can take advantage of.

Improving your financial opportunities

If you have good business credit, your business can receive more and better financial opportunities. With a good credit record, you’ll find lenders and investors will be more interested in lending you money to support your business ventures. Lenders won’t just trust that you’ll repay them on time, but they’ll also typically offer your business lower rates of interest than you’d be offered if your business has poor credit history (or none at all).

When you can access loans at attractive rates, your business will be able to borrow the funds it needs to make investments in equipment or new products that it would otherwise be unable to afford. You’ll also be more likely to find partners and investors who are willing to make investments in your company as your good credit score proves you’re running a reliable and reputable enterprise.

A strong safety net

A good business credit score also creates a strong safety net to protect your company in the event of a financial crisis. Although you may have no need for extra money right now, who knows what the future holds in store? If your sales drop over the coming year would you be able to pay your rent or cover your payroll?

When you have built up good credit, your business will have no difficulty in borrowing the money it needs in a financial crisis.

How can I ensure my business credit score is good?

Here at FairFigure, we can offer you advice about how to optimise your business credit score. Here are a few of the options to consider:

·         File full accounts, not micro-entity or abbreviated accounts at the end of the tax year.

·         Pay all your business bills on time and in full.

·         Avoid any insolvency proceedings or CCJs.

·         Share all company information so that credit reference agencies are able to validate the data held on your records.

·         Update any changed company information such as the registered address of your offices straight away and notify your customers, suppliers, and Companies House as quickly as possible.

·         Collaborate with suppliers and form a good working relationship so you can then ask them to share your payment record data and feedback with credit reference agencies.

·         Keep your personal finances in good condition too as sometimes your personal accounts could be used as a basis for calculating a credit score for your business if you’re a brand-new start-up.

·         Only submit applications for credit when absolutely necessary. Submitting a lot of applications within a short period suggests you’re finding it hard to get the funding you need and that can have a negative effect on your company’s credit score. Ask for quotes rather than submitting applications when you make enquiries about financing.

·         Check your business’s credit score regularly and register for alerts to notify you whenever your score changes so you can act quickly and rectify any issues.

·         Keep an eye on your partners’, customers’, and suppliers’ business credit scores too as this will limit any damage incurred by your business if they develop financial difficulties.

·         Good credit is vital for the good image of your business and can be as positive as any form of offline or online marketing according to Celebian

Get valuable insights into your business credit rating

It’s clear that knowing your business credit score and keeping track of it over time is key when it comes to your company’s long-term success. FairFigure is on hand to help. Offering a free online service to help business owners to gain valuable and essential insights into their companies;’ finances, FairFigure supplies details about budgeting, fundability, business scores, and security alerts in real-time so that you can stay on top of your finances. We offer business credit monitoring, personal credit monitoring, automated business budget advice, and Fundex and No PG Funding Predictions to make it as simple as possible for you to secure the money you need to fund your business ventures.

It couldn’t be easier to sign up for our services now, and it’s completely free of charge, so register today!