Business Credit Rating - Its Importance for Professionals
As a small business owner, you often rely on credit card to make office and other related purchases. The availability of all sorts of business cards with substantial limits and favorable rates makes it easy to find the right financing tool for various corporations. This fact determines the strong demand for business revolving credit lines and, consequently, their extensive supply.
With so many people applying for business plastic, not every one ends up being a success. It's estimated that the majority of applicants tend to use their personal FICO scores and personal guarantee to get approval. This cuts both ways because though you will be able to fund your business, your personal payment history and scores may get a serious hit.
Everything that happens to the business account is shown in your personal credit file as you signed your, not your business's, name in the card agreement. As most small business card applications require personal guarantee for eligibility, applicants hurry to respond to get the proper card benefits. Generally, they are provided with no annual fees, low APRs, sign-up bonuses, rewards - miles, points or cash back - and online account management services.
Hardly any one knows that apart from the benefits and conveniences, it is of prime importance to start building a separate professional business credit rating.
Business, or trade, credit is indispensable for your company to adequately develop and build profitable business relations with other enterprises. It is important because your personal credit will be safe from any damage caused by your employees' wrong business card spending and incalculable situations. How do you get a business card start building a separate professional business file, without affecting your own FICO scores?
First, register your business with the major bureaus involved with creating a business profile and gathering information about your company's financial operations. Experian and Equifax operate special divisions compiling separate profiles. You may also contact Dunn and Bradstreet and Business Credit USA to get started.
Second, search and find a company to grant you business card without personal credit check and guarantee. This provider will use the business bureau's data to issue your company a business card. It is not impossible even with a 0 business credit rating, if you comply with basic requirements which include the availability of the proper documentation and compliance with local, state and federal laws. A finished professional business plan plays a factor for the lender's approval decision.
If your company answers the standards and looks a good risk for the bank, you can apply online and get a corporate card for your business-related expenses and company's financial foundation development.
A separate FICO score will be established which ranges from 0 to 100, with 75-100 considered excellent rating. All financial transactions and card spending in the business's name will be gathered at the proper business bureau, steadily building a professional business credit profile. Now the way you and your employees manage the business card will determine the success of the enterprise. On time payments and good debt-to-limit ratio are a must to keep your profile attractive for future potential lenders.