Major business credit bureaus maintain business credit reports. The good news is that you can start building business credit even if your personal credit isn’t strong. Here we’ll focus on how to build business credit, but be sure your personal credit scores are good as well.
It is common for lenders to require personal credit checks for small business loans.
It can sometimes be difficult to ascertain which companies appear on business credit reports.ĭoes Your Personal Credit Matter for Your Business?īoth personal and business credit are important if you’re a small business owner. Credit limits and the names of creditors typically aren’t reported.Anyone can purchase a business credit report, in contrast to personal credit reports which are more tightly regulated.Unlike personal credit, where most loans are reported to credit bureaus, not all companies report payment history to business credit.Other businesses and lenders then purchase a business’s credit report to help decide whether to extend credit or do business with that company. Lenders, vendors and other companies may report payment history to commercial credit reporting agencies. How Business Credit Worksīusiness credit works much like personal credit.
The reality is that many small business lenders check personal credit, and that some loans, including bank loans or SBA loans, will require a personal guarantee. The Nav American Dream Gap survey found that small business owners who know their business credit are 41% more likely to report being approved for a loan.Īt the same time, it’s misconception that if a business has good business credit, the owner’s personal credit will never be checked, and that they will no longer have to provide personal guarantees for a business loan. Since there is no requirement that companies notify you when your business credit is reviewed, however, you may never know how your credit history has affected your business. Good business credit may help you qualify for small business loans or financing, as well as help you secure financing at more favorable terms or lower interest rates. Anyone can check business credit, so it may be used by lenders, suppliers or even companies deciding whether to do business with you. Your business can have its own credit reports and scores. Here we’ll share simple steps to establish and build business credit to help your small business grow.Īdvertiser & Editorial Disclosure Why Is It Important to Establish Business Credit? It can even help your business land lucrative business contracts.
Strong business credit can make it easier or less expensive to get certain types of financing, business insurance, or better terms with suppliers. Building business credit can benefit your small business in many ways.
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