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Credit worthiness is an increasingly important aspect of your personal and business profile. One of the great benefits of starting a business is that it is possible to establish a new and separate credit profile that is distinct from your personal credit profile.

Powered Agriculture receives quite a few requests each year from LCO’s for open accounts to purchase products and services and have us bill them at the end of the month. The fact of the matter is we aren’t large enough to finance everyone who walks through the door so we have to be selective about who we lend money to.

This week I have been working on some articles to help explain business credit and how to improve your company’s credit profile. A pristine credit profile will help you obtain credit cards, loans, and lines of credit at the most favorable rates. It will also help shops like ours open accounts to you that will help both of us prosper.

It takes two

Bussiness credit is two parts really. You have to establish a separate tax entity. The business has to be viewed by everyone (bureaus, Uncle Sam, vendors, etc.) as a distinct and separate entity from the owner(s). Otherwise, financing will always come with your personal guarantee and be secured by your personal credit profile.

The second part is barrowing and buying products and services from companies that will report your credit history to bureaus and agencies that monitor your profile. This part is going to take time and discipline to make payments, increase revenue, and build a history. There aren’t any shortcuts with long-lasting benefits so you’ll have to be hardworking, creative, and diligently get the job done.

The good news is that these same techniques will also help you build a stronger more successful company. So check back in, and I will explain the two parts of building business credit in more detail.