Business Credit: An Essential Tool For Business Success

It has been said that it takes money to make money. As a business owner, you know this is true in most cases. The problem facing many business owners is, they don’t know where to get the money besides their own saving.

What is Business Credit?

Generally, business credit (sometimes also referred to as corporate credit) is created when creditors give extra time for payment to some specially chosen business entities for the money, goods or services they received. Even though they are different, one can think of business credit is for business as in personal credit is for individual.

Why Do Your Business Needs Business Credit?

For most small business owners, financing the business is always a major concern. Having the right kind of financing at the right time is of paramount importance for the success of a business.

No bank will give you business credit unless you establish your creditability. In order to procure a business loan you would need a business history. A good business credit history will get you the finance your business seeks.

A good business credit can help your business survive temporary financial hardship. You may not see the need for a business credit now, but very much like insurance, you rather have it and not needing it than need it and not having it. It can definitely help your business resurface without having to grope in the dark.

The main benefits of having a Business Credit profile for your business are:

  1. Business credit serves the all important purpose of getting you the much needed business credit lines for your business. Business credit lines is credit extend to your business usually by banks or financial institutions.
  2. Limit personal liability. One of the most important reasons why business owners use business credit is that, if the business fail, the business owner does not have to be personally responsible for the debt.
  3. Save money. Business credit interest rates are usually lower than personal credit interest rates, and the difference could actually run into thousands of dollars in the long run.

How to Build Business Credit?

A personal credit (sometimes also referred to as consumer credit) profile is created automatically when you use your credit card, get a loan, or open a bank account. The three big Credit Bureaus collect and build your personal credit profile without you noticing it. (Since this is not an article on personal credit, we will skip the detail)

Unlike consumer credit, business credit profile is not created automatically. The business owner will have to follow the steps and deliberately create a business profile.

Most business owners do not know it; maybe that explains why most businesses do not have a business profile.

This is the mistake that they commit as having a business profile will help in creating an identity for the business that they have set up and the steps that need to be followed have to be of creative measures and not to be done in a hurry. For business credit, they can take win proposals training to understand the credit history better that will be useful for the future.

Therefore, it takes purposeful and planned actions to establish business credit. If you do not wish to do-it-yourself, you can hire someone else to do it. There are some business credit services companies help businesses build their business credit score and business credit ratings.

It’s true that most respectable companies who provide business credit services charge a rather steep fee. But for what you will get out of their programs, it may be worth your while spending that money. But again, you can do it yourself if you are willing to learn and put in the time.

What is Business Credit Score and Business Credit Ratings?

When dealing with an individual, creditors will base their credit decision on the individual’s personal credit history. As you may have guessed, when it comes to dealing with a business, credit decision on a report of the business — a business credit report.

Business credit score and business credit ratings is the scoring and rating system devised by business credit bureaus to keep track and rate your business in the business credit report.

The major business credit bureaus are Dun  amp; Bradstreet, Experian, Equifax and Small Business Financial Exchange. While each of the bureaus employs different scoring and rating system, the underlying principal is the same: Pay on time, and you will improve your score and rating.

What’s Next?

Learning to build the credit for your business is not rocket science, but it is not first grade math either. It will take some careful planning and dedicated effort to build good business credit score and business credit ratings. There are many useful resources you can find on the internet (eg. to enhance your knowledge about business credit. And for the benefits you will receive, it definitely worth your while doing that.


Adrian O'Connor is a passionate business writing coach and a creative copywriter. He is out there to make Business classes more interesting for all the students out there.