Starting an entrepreneurial journey in the present-day competitive world is an astounding feat in itself. However, that is just the beginning. Businesses always bring along profits as well as risks. While you will be more than happy to see the profits rise, we are sure you want to mitigate the risk as much as possible. A great way to do so, is taking some vital steps towards the financial security of your enterprise, and what better than building company credit to alleviate the uncertainties?
If you are wondering how to go about it, don’t worry, we are here to answer just that!
Why Build Company Credit?
Your business might be doing perfectly well, and you’re reaping the profits that you once dreamt of; however, given the market’s dynamism, there is no way you can be sure of the future and what it holds. Hence, it is best if you have a safety bet in place that can help you deal with any unforeseen financial troubles. You can do so by ensuring that you have a proper company credit. Your creditability will help you Apply for a Business Loan as and when required and will ensure that your application gets sanctioned without much ado.
We believe this is more than just a good reason to start working towards a credit history that speaks for your business and you! However, let us list down some more reasons pertaining the same.
- It Offers You Access to Bigger Loans
An excellent credit history will ensure that the lenders can place their trust in you, thus encouraging them to approve a significantly large sum of money as a loan. Of course, for this to happen, both, your personal as well as your business credit scores need to be better than average.
- It Offers You Access to Better Loan Offers
At the time of a crisis, merely getting a loan isn’t good enough. You ought to get it from a reputable lender at fair interest rates. Moreover, you also need a variety of other aspects such as prepayments, foreclosure, and so forth to work in your favour. It is for this reason that you need to maintain a flattering business credit.
- It Ensures Better Rates of Interest
A lender only approves a loan when your ability to repay the same is evident. If the lender sees any risk in offering you the loan, the chances are that your investment will entail a more massive rate of interest, in a bid to cover the risks involved. However, if the credit score for your business is right, your intent and ability of repayment remain unquestioned, and thus, you will have access to loan offers at lower rates of interest.
How to Build Company Credit?
Now that you understand the significance of building an impressive business credit, let us delve deeper into the process of creating the same. Trust us, all you need is some diligence, and this seemingly tricky task will feel like a cakewalk.
- Maintain a Reasonable Personal Credit
More often than not, lenders analyse your own credit history before assessing that of your business. It is therefore extremely imperative that you manage your finances well, which is quite easy if you follow these simple steps –
- Paying your bills on time
- Paying your EMIs religiously
- Making full payments towards credit cards
- Using only up to 30-40% of the upper limit on your credit card in any given month
Just in case, you feel that you max out on your credit card more often than you should try applying for a card with a higher credit limit, which will help you maintain a better score in the long run.
- Find a Suitable Business Credit Card
Numerous banks and non-banking financial institutions offer credit cards that cater to the needs of businesses. To build a better credit for your business, we strongly advise you to find a card that suits the needs of your business and apply for the same. Once you get the approval for it, make all your payments on time, and ensure that you have no outstanding bills on your cards.
- Look For Suitable Lenders
If you have a business, it is evident that you hold your accounts in a bank. However, it isn’t safe to assume that your bank will always prove to be the right lender. There may be times when the lending policies of your bank aren’t up to the mark, and you may need to look around for other lenders. Rather than doing so at the last minute, we suggest you have a couple of reputable lenders under your sleeve, right from the very beginning.
For all you know, this will give you the much-needed opportunity of comparing interest rates, and other charges before you take a Business Loan. The right lender will help you maintain a better credit score, which is your primary goal.
We hope you now have a better understanding of why you need a business credit, and how exactly can you stay prepared for the same!
Also Read : Smart Moves to Make When You’re in Debt
To apply online for Credit Cards, Secured Loans and Unsecured Loans, visit www.mymoneymantra.com, the leading online lending marketplace that offers financial products from 60+ Banks and NBFCs. We have served 2 million+ happy customers since 1989.
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