Good credit can give every type of business a big advantage as it grows. It may be difficult for businesses to build credit as they are just getting going, but taking steps geared towards establishing a good score may be a prerequisite to achieving your plans for growth. Here are some things that business owners need to know about credit.

Factors That Affect Your Score

If you have a relatively new business, your personal credit score could be important. A business’ principals need good personal credit to demonstrate that they have resources and are well-organized. Over time, the number of years that you are in business may affect your score. The longer you operate your business and pay your bills on time, the better your business credit will be. Late payments can detract from your score considerably.

How Good Credit Helps Your Business

A lending institution may not want to work with a business that has a poor credit score. You may find it difficult if not impossible to get financing or a line of credit for something that you urgently need to grow your business. Alternatively, not having a good business credit score may result in having to pay high interest rates on any funds that you borrow.

Tips for Improving Your Credit

The most important thing that you need to do to raise your business credit score is pay your bills on time. Consistent payments on every line of credit will reflect positively on your score. Any accounts that are delinquent or go into collections will lower your score considerably. Try to prioritize paying off any accounts that have gone into collections or have a delinquency status on your credit report. Meanwhile, you need to continue making timely payments on all of your other outstanding obligations. Try to avoid accumulating high balances on your business credit cards. Overutilization of your available credit and carrying a high balance month after month will hurt your score.

The Benefits of Monitoring Your Credit

Make it a point to check your credit score and review your complete credit report periodically. You can track your progress and identify what measures you are taking that make the biggest difference for your business. Also, you can catch any errors or instances of fraud as soon as reasonably possible.

You probably won’t be able to make your business’ credit score great overnight. Over time, patience and consistency will help you give your business the credit that it needs to thrive.