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You’ve probably heard of personal credit if you’ve ever applied for a car loan or a credit card. This score indicates to banks and other lenders how trustworthy you are with your own money and how likely you are to pay your debts on time. As a business owner, you should also understand business credit, demonstrating your ability to repay business loans on time.

Lenders, suppliers, and other vendors can see how financially risky your company is if you have business credit. This score assists them in determining if your company should be granted financial credit. Before dealing with you, lenders will typically check your company credit score if you seek small business finance or trade credit from them. As a result, improving your business credit can help you put your company up for success. The following are some of the main reasons why company credit is crucial.

1. Get the Best Interest Rates on Loans

The big perk of excellent business credit is that it will help you get the best interest rates on loans, especially if you’re opening a small business. Banks and other lenders want to work with businesses that are financially healthy. That’s why your business credit is so important.

If you have bad business credit, lenders won’t trust that you can repay your loans on time. This can make it much more difficult to get a business loan. It can also hurt your chances of getting a business line of credit, which is like a revolving line of credit. If you have bad business credit, you may also have to pay a much higher interest rate on loans or a higher fee for a business line of credit. The good news is that no matter what your business credit score is right now, you can work to build business credit and get better interest rates in the future.

2. Get Financing Quickly and Easily

More than ever, it’s important for small businesses to be able to get financing quickly. Your company may need a big one-time investment to help with business expansion or to tide you over until you reach your next milestone. If your cash flow isn’t strong enough for you to get a loan, you may need to use your business credit to get business financing.

If you have bad business credit, getting financing can be more difficult. Most lenders will require you to have at least fair business credit before applying for financing. If you want to get financing quickly, you may want to start by focusing on building your business credit even before you need financing.

3. Get the Best Trade Prices with Suppliers

Suppliers also use business credit scores to determine whether you are a good risk for them. Suppliers might be less willing to do business with you if you have bad business credit. By having a high business credit score, you will get better trade prices from suppliers and help your business save money.

4. Safeguard Your Personal Credit Score

Business credit is equally essential for safeguarding your personal credit. As a general guideline, avoid using personal credit for company bills and purchases. Using your personal credit for major company costs will raise your credit utilization ratio, which evaluates how much credit you are using in comparison to your credit limit. Your personal credit score suffers as a result of high credit use.


Building your business credit isn’t easy. It takes time, energy, and effort. The key to building your business credit is to focus on all aspects of your business. The more financially healthy your company is, the more opportunities you’ll have for growth and expansion. If you keep this in mind as you build your business credit, you will be able to get the best interest rates on business loans and the best trade prices from suppliers.

If you want to know more about starting your own business, Head Start Biz Solutions is here to guide you through every step of the way. With our expertise, you’ll never miss a blindspot. Please work with us today!