Category: Business

Let’s chat about something essential in the business realm: business credit and the often confusing business credit score. Additionally, you may be wondering, how can I build business credit without using personal credit? It’s a question many small business owners ask as they seek to keep their business and personal finances separate.

What Is A Credit Score?

A personal credit score helps lenders determine what products to offer you and on what terms. Personal credit scores consider factors like credit card balances, timely payments, and length of credit history. Therefore, the higher your score, the better credit opportunities you’ll have—on a personal level.

But when it comes to your business, think of your business credit score as your company’s financial reputation. Unlike personal credit, your business credit score shows how reliably your business makes payments and manages credit. This score gives lenders a quick snapshot of your business’s financial health.

How to Build Business Credit Without Using Personal Credit

The good news is, you can establish and grow your business credit without relying on your personal credit. Here’s how:

1. Incorporate Your Business: The first step is to legally separate your business from yourself. Subsequently, incorporating your business or forming an LLC can help you create a distinct credit profile for your business.
2. Get an EIN (Employer Identification Number): This is essentially a Social Security number for your business. It’s used for tax filings and to establish business credit accounts without using your personal SSN.
3. Open a Business Bank Account: Separate your personal and business finances. Start by opening a business bank account and using it for all business-related transactions.
4. Apply for a Business Credit Card: Once your business is set up, apply for a business credit card. Make sure the card is only tied to your business and not to your personal credit. Use it regularly and pay it off on time to build a strong business credit score.
5. Establish Trade Credit: Many suppliers will offer your business trade credit, allowing you to purchase products or services on credit and pay later. Make sure these accounts report to business credit bureaus, which helps grow your business credit profile.

What Affects Your Business Credit Score?

To grow your business credit without using personal credit, it’s important to understand what factors affect your score:

• Your Bills: Timely payments build a strong business credit profile.
• Credit Utilization: Keep your business credit card balances low compared to your credit limits.
• Credit History: The more financial transactions on your credit profile, the more reliable you appear to lenders.
• Public Records: Legal issues, liens, or bankruptcies related to your business can negatively impact your business credit score.

Where Can You Check Your Business Credit Score?

Just like with personal credit, there are business credit bureaus that track your business’s financial health. Comparatively, these bureaus aggregate data about businesses to determine their creditworthiness. Here are the main business credit bureaus:

• Experian
• Dun & Bradstreet
• Equifax

Why is Business Credit Important?

Your business credit score allows your business to secure loans, lines of credit, or trade accounts. Creditors or trade partners may check your business credit to determine if you are creditworthy. A higher business credit score can lead to lower interest rates and better terms, helping your business save money in the long run.

How Gild Insurance Can Help You Build Business Credit

One unique way to build business credit without using personal credit is through Gild Insurance. Gild Insurance is the first insurance agency to use business insurance premiums to help build your business credit score! With Credited by Gild Insurance, your business can use on-time insurance premium payments to help improve its credit profile.

To learn more about business credit, check out our guide: Building Business Credit Fast: A Friendly Guide to Financial Success.

If you need help with your business, your friends at Gild Insurance are only a click away! We combine the latest technology with experience to provide business insurance options that fit your business.

As a beauty or barbering professional, a one size fits all mentality would hardly lead to a successful business. Your customers are diverse in texture, color, curl pattern, and density. Each is unique! For your business to succeed and to foster trust with your clients, you would never offer the same services, in the same manner, to each and every client. Tailored solutions are a necessity!

Now ask yourself, are you using that same personalization mentality to run your business?

Oftentimes, the role of business owner succumbs to a one size fits all mentality. It is just easier. The efforts of providing services as a stylist or barbering professional leaves little time or energy to develop a personalized approach to your business’ operations. 

One of the common areas where personalization falls victim to a one size fits all mentality is business insurance. This is certainly due to the common misconception that the sole purpose of this type of insurance is to protect against emergencies. This leads business owners to purchasing the cheapest or most convenient policy. Because, in their minds, it is highly unlikely for a disaster to occur, so expending effort or dedicating time to searching for business insurance is not worth it.

Though business insurance can be there when the worst happens. It is also so much more than a guardian from tragedy. Like premium and tailored color, your business’ insurance should be personalized to your business’ operations, minimizing the risk of damage and ensuring long-lasting outcomes. Your clients deserve premium results and so does your business!

It’s time to start moving away from the one size fits all mentality and find your tailored solutions. Check out Gild Insurance to learn more. Also, check out our blog regarding the most common small business questions.