When starting a new business, it is important to have a clear credit rating and positive credit history. Before applying for the big loans and credit extensions, you must first start small. There are ways to ensure that possible denials of credit can be turned into approvals that will enrich your life and the life of your business.
Set up your business foundation. Make sure that you have all small loans paid down, that you have obtained a business tax ID number, and that you have a good clientele base. These are some of the things potential lenders will look for in determining your risk factor.
Set up accounts with reputable vendors and suppliers. Most of these companies will extend credit to you for goods and services and also report to the credit reporting agencies on your behalf. Building a good relationship with vendors and suppliers will leave your business in good standing and make you appealing to potential lenders.
Apply for two or more business credit cards. Some companies offer wonderful incentives to small-business owners such as 0% APR. When applying for credit cards it is important that you not tie them in with your personal credit. If something were to happen to your business and your credit debt from the business were high, then it could negatively affect your personal credit rating and make buying a home or car almost impossible.
Apply for larger credit accounts once you have built a positive relationship with your credit card companies and vendors and suppliers. Larger credit accounts will fill the needs in your business faster and help make expansion and financial security easier to obtain.
Tips and Warnings
- Only apply for credit with companies that report to credit reporting agencies. This will increase your chances of having a shining credit score for your business.
- Never overextend your credit. Taking on too much credit debt and not being able to pay it off can make your business go bankrupt. Use established credit prudently.