Business Credit vs Personal Credit
There are a lot of things you would be able to get if you have a good business credit. A business credit is just like a personal credit – only it is better than that. Your business credit can be likened to that of a mirror – it reflects something about you. Specifically, it reflects your ability to make payments and how responsible you are about your bills. You should always consider business credit to be as important, if not more important for small size businesses. Why? Because the people you would need in order for your business to grow and succeed, people and companies such as your partners, lending companies, banks and suppliers will almost always base their decision on the business credit you have established. They will decide if you are someone worthy of the risk of borrowing their money or not. If you have established a strong business credit, your gain the following benefits: terms from your creditors that work to your advantage, lower interest rates and it would even be possible to borrow money even in the absence of a personal guarantee.
Do not depend so much on your personal credit. It is true that you can borrow money from lenders with that alone. The thing is (and a lot of people have learned this the hard way), it is not usually good to mix business matters with personal ones. What if your personal – your own finances suffer some kind of setback? Is your business going to suffer too? Yes, of course! Another reason why you should always keep both credit types separate is that both credit types are being scored in a different manner. Although they have similarities, they also have their differences. When it comes to their similarities, the process of building both types of credit is quite the same: you loan a specific amount, pay responsibly and then you make it a point to let business credit reporting groups your payment history. Another thing you might want to consider doing to improve on your business credit report is to share information about your company to the business credit reporting groups because people trust these groups so if they know about your company, people would know about it too.
If you have built your business credit properly, there will be no need for you to use your personal credit for business means. We all know that businesses are risky and if something bad happens, of course you would not want your personal credit to be taken down with it too, right? That is the main reason why you have to keep your personal credit separate from your business credit as much as you possibly can. Business credit is a way to guard your business, but if you have used your personal credit for business purposes, if you encounter problems regarding personal finance, once it shows up in the credit reports, your business will most likely get affected as well, in terms of operations and your ability to ask loans.