Why is credit report important?

You have probably heard about personal credit score also known as FICO score, especially if you have applied for a credit card, mortgage or some other kind of loan. You know that personal credit is a big deal but do you know that your business is also very important. Regrettably not many businesses are aware of it. Because your business credit report plays a major role in determining whether you can get business loan but it can also be helpful in deciding whether you should provide or refuse credit to your customer.

If you want to get a business loan from a bank or another financial institution than you should care about your business credit score. Just like the personal credit score shows how likely you are to repay your debt, business credit shows reliability and creditworthiness of your business. Good business credit can help you get more favorable payment terms.

For example Emry Capital requires 550+ FICO for a line of credit and 530+ FICO for an invoice factoring. By law you need to obtain permission before performing a personal credit check. With business credit it is different. It can be obtained for a fee from a credit bureau. This happens when your customer is another business. Also they are calculated on a different scale. Your personal credit can be somewhere between 350 and 800 while the business credit is measured from 0 to 100.

You can get a credit report in U.S. and Canada at a credit bureau that provides information on a personal or company's credit history. There are many credit bureaus but the largest are Dun&Bradstreet, Experian and Equifax. Information in a credit report include, identifying information, credit accounts, credit ratings and credit score, public record on overdue debts and credit inquiries in the past two years.

It is possible if you are new in business that you are using your personal credit to do the borrowing. But it could be a good thing to open separate credit for you business. It can be beneficial for multiple reasons. Good business credit can help you increase your chances off getting a loan or a line of credit and your borrowing power will increase so you can a larger amounts of money. It can also lower the insurance rates in the future and by separating it from personal credit it will be easier for you to track your business expenditures for tax purposes. You can also use credit reports to check out your customers and diminish the risk of not being paid and secure you finances that way.

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