Reasons Why Your Business Needs a Good Credit Score

3 min read

Executive Summary

Whether you're bootstrapping through the initial phases of your business or have sufficient funds from investors, it's worth building up a strong business credit score. Here's why you need a good company credit score.

Disclaimer: Our first priority is giving you the best financial advice for your business. Tillful may receive compensation from our partners, but that doesn’t affect our editors’ opinions or recommendations in the content on our website. Editorial note

A business credit score is a number that signifies whether a business is eligible for a loan. Credit scoring companies determine credit scores depending on a business's repayment histories with suppliers and lenders; credit obligations; the duration in which a business has been in operation; and business size and type.

You can check company credit score details through various scoring firms. It's worth noting that healthy company credit is an essential ingredient in developing a successful business.

Whether you're bootstrapping through the initial phases of your business or have sufficient funds from investors, it's worth building up a strong business credit score. Here's why you need a good company credit score.

Faster Business Financing

You must check company credit score details if you're thinking of applying for business loans to solve cash flow issues fast. Lenders might examine your score when applying for funding. A high score will enhance your likelihood of obtaining approval for a loan, credit line, or other financing products.

A high score also demonstrates to a lender that you'll make timely repayments, and this qualifies you for a loan faster. Another benefit of having a good score is that the lender might be convinced to give you lower financing rates.

Enhanced Loan Terms

Lenders typically offer favorable business loan terms if you demonstrate creditworthiness. For instance, you could leverage your score to secure decreased interest rates and higher credit limits. Better terms will benefit your business considerably. Lower rates could save your business thousands in interest payments.

Better Repayment and Credit Terms with Suppliers

A company credit check isn't merely useful when working with lenders and banks. A good score can help you secure improved repayment terms with suppliers and vendors. A strong score portrays you as trustworthy, prompting suppliers to give you flexible repayment terms. This is especially useful when you need to purchase equipment, stock inventory, or make major business purchases.

Keep in mind that choosing the right business supplier could equally help you secure favorable repayment terms that align with your needs.

Protect Personal Finances

A company credit check allows you to separate your business and personal financial obligations. The recording of your company debts will be on your credit reports; this will protect your credit ranking from any monetary woes your company might face.

Still, it's important to examine your report because lenders might want to evaluate your personal score along with your company's credit report when applying for a loan.

Obtain assistance for business expansion

Even if your business can meet its monetary needs without a loan, you might need credit at some point for business expansion. Business expansion can be in terms of new employees, inventory, a new product line, or the inclusion of superior equipment and technology. In this instance, you can consider a bank loan or approach investors and sponsors. A good score will help you earn trust among investors who will be eager to help you expand.

As a business owner, you must build a good credit score, which is particularly vital when beginning a business, especially if you do not have enough cash-on-hand to meet all your business expenses. 

About the author

Ken So

Written by Ken So

Ken is the Founder and CEO of Flowcast and Tillful. Having spent most of his career before Tillful in tech and investment banking, he covers all things business credit and finance with a twist of insider knowledge.

You may also like

Is your business getting the credit it deserves?

Sign up to take control of your business’s financial health today.

Get Your Free Score

Tillful Advertiser Disclosure

Our first priority is giving you the best financial advice for your business. Tillful may receive compensation from our partners, but that doesn’t affect our editors’ opinions or recommendations in the below content or content throughout our website unless expressly stated. Our partners cannot pay for favorable reviews, and they don’t review, approve or endorse our editorial content.

Tillful may receive compensation from third-party advertisers, but that doesn’t affect our editors’ opinions on the services or products we cover in our content. Our marketing partners don’t review, approve or endorse our editorial content. It’s accurate to the best of our knowledge when posted.

Any personal views and opinions expressed are the author's alone, and do not necessarily reflect the viewpoint of Tillful. Editorial content is not those of the companies mentioned, and has not been reviewed, approved or otherwise endorsed by any of these entities.

Reviews are not provided or commissioned by the credit card, financing and service companies that appear in this site. Reviews have not been reviewed, approved or otherwise endorsed by the credit card, financing and service companies and it is not their responsibility to ensure all posts and/or questions are answered.

Your business’ success, future and financial well-being is our first priority.

Every time.

We believe everyone should be able to make financial decisions with confidence. And while our site doesn’t feature every company or financial product available on the market, we’re proud that the guidance we offer, the information we provide and the tools we create are objective, independent, straightforward — and free.

So how do we make money? Our partners compensate us. This may influence which products we review and write about (and where those products appear on the site), but it in no way affects our recommendations or advice, which are grounded in thousands of hours of research. Our partners cannot pay us to guarantee favorable reviews of their products or services.

Back to Top

cross