4 Practical Benefits of a Good Business Credit Score

A business credit score is akin to your personal credit score - just as a personal score is a measure of personal creditworthiness, a business credit score is a measure of your company’s creditworthiness. A business information report is used to calculate a score that the financers refer to make business lending decisions. Since businesses require huge capital, lenders seek to minimize risk as much as possible. Since a business credit report is a decent indicator of business credibility considering the various financial aspects it lists of an organization, it forms an inherent portion of credit risk management in banks & lending institutes and helps them calculate their risk. Recognizing the importance of a business credit score, let us ponder upon a few apparent benefits that a company can gain by maintaining a good credit score.

1. A Quick Pass to Qualify for A Loan

The best advantage of having a good business credit score is that you will get a premium treatment from the lender who will be more than delighted to extend a loan to your company. On the other hand, you can really struggle with a loan if you have a credit score of less than 700. Lenders are naturally hesitant to pass a loan to someone with an unstable or poor credit history, even though your current situation might seem better. It is a great sigh of relief when you get through the difficult process of credit approval with much ease. Any score above 750 is deemed as a good credit score for business loan.

2. Secure Better Deals

With a good credit score, you will not only get a loan, but you will also be in a position to negotiate and get it at a good interest rate. Better interest rates can save you a decent amount of money which you can pass over to your customers to win more clients or simply put the excess back into the business.

3. Separates Business with Personal Finances

Business credit helps you to separate and clearly define business and personal financial obligations. You can obtain a business loan without the need for a personal guarantee and your company debts will be reported only on your company’s credit information report. This reduces your personal liability and shields your personal assets. Alternatively, your personal spending patterns have no effect on the business credit score. Of course, your personal credit report still holds weight as the proprietor of a business. When you apply for a loan, lenders may want to review your personal credit score for added credit risk assessment along with your business’s credit report.

4. Build a Strong List of Suppliers

Strong business credit will not just help you secure loans, it will also get you into the good books of suppliers from whom you seek credit. When your suppliers perform a credit check on you, they get to clearly see the financial stability in your business and your positive track record of timely repayment. This makes them more comfortable in extending credit to you.