A business credit score is as important as your personal credit score. Your business creditworthiness is calculated based on your financial history, trade experiences, outstanding balances and much more. Credit scores are generated by Credit Reporting Agencies (CRA). It indicates the lenders how trustworthy you were with your past-payments and how likely you’re to promptly pay your future loans.
Let us say, you would want to expand your current business or set up a new company, what’ll be the first word that strikes your mind?
Yes. It is “Funding”.
When running a small business, you might not have enough cash handy to provide for business needs including inventory, purchasing equipment and managing other costs. In those situations, approaching a financial institution would be the only option. Financial institutions will, in turn, pull your credit report to analyze your business credit score.
Hence, it is very important for business owners to understand the importance of building a good business credit score in addition to their personal credit score. Here are a few reasons why a good credit score is important for your business.