Search for Small Business Loan Sources and receive your matched lender list
AND received FOUR free Business eBooks worth $39.95!
Search for Small Business Loan Sources

Starting up a small business requires a lot of capital. In order to meet those capital demands, entrepreneurs will often use their own funds plus borrowed money in the form of credit cards or home equity lines of credit. While these types of financing may be necessary to get the business off the ground, small business owners should establish a business credit profile as quickly as possible to save their personal credit scores from damage.

Beyond just the risk of credit injury if the business fails, using personal loans to provide working capital can easily pull down one’s personal credit score. This is because part of a credit rating is based on how many open and available lines of credit a consumer has. This average consumer has 11 credit obligations at any one time – typically 7 credit cards and 4 installment loans. But a business owner may have double those averages because half of her credit obligations are for the business. Unfortunately, they are not separated by the credit reporting agencies and it all reflects on the personal score, bring it down. The solution is to establish a business credit profile.

Company owners can start by registering their firms with the major business credit reporting agencies: Dun & Bradstreet, Experian Business, Equifax Business and Business Credit USA. In order to register, businesses must first have a federal tax identification number from the IRS. Maintaining a separate business and personal credit report is also easier when a company is incorporated or an LLC. This lessens the liability to the personal score.

Once registered, the most important part of building a business credit profile is to ask all trade partners to report any relevant credit transactions. No businesses are required to send in information so sometimes business owners have to do their own footwork, making sure others are reporting data that could build their history.

And of course, keeping up a high business credit score involves making timely payments and keeping debt-to-available credit ratios low. But separating the business and personal credit scores will remove some of the stress from keeping a business fully financed.


Search for Small Business Loan Sources and receive your matched lender list
AND received FOUR free Business eBooks worth $39.95!
Search for Small Business Loan Sources