Monthly Maintenance Is Like A Monthly Chore;  It Has To Be Done To Continue Building Credit

Many entrepreneurs don’t realize they can build both personal and business credit simultaneously.  This is advantageous, especially since it is not wise to rely on a personal credit guarantee to obtain business credit.  It is best to find lenders who do not require a personal guarantee or credit check.

A personal credit is begun with the issuance of a social security number and acquiring the first credit card.  The credit report records any payments, address and job changes, and every credit application or inquiry.  It reflects a person’s dedication to repay debts.

Businesses obtain trade credit from other businesses, which is recorded by credit bureaus, again reflecting payment history.  All payments with other corporations are recorded to the business credit bureaus.  Because this is only done voluntarily, and not a prerequisite, constant monitoring is necessary, ensuring this is carried out, in order to reflect an accurate credit report for the corporation. 

Other factors pertinent to a credit score are the amount of available credit on lines of credit and credit cards, as well as the duration of time of that credit.  Each time a company makes a credit enquiry, it negatively reflects on the credit report if it occurs frequently, above and beyond a 30 day period. 

Personal and business inquiries are not separated on a personal credit report, so this has a negative effect on credit scores.  When a business owner uses their personal credit history to obtain business credit, it limits their business score.

Monthly maintenance is required. Manage all debt.  Regular monthly payments reflect positively on a credit profile and keep it active.  Accurate financial statements play an important part in debt management. A good credit report helps the corporation  manage revenue and operate more efficiently. 

Business credit cards can free up working capital essential to the ongoingness of the business.  It can be a lot of work to ensure the company continues to build business credit and makes payments on time that are reported to credit bureaus.  However, that time invested may be the most important key to the ultimate success or failure of the corporation.