Aside from cash, the biggest indicator for a business’s financial health is its credit score. While it’s up to business owners to decide whether to borrow money, credit scores stretch beyond loans and finances. They determine how easy and simple qualification processes might be, how appealing the terms of loans are, and can even be an incentive for other businesses willing to negotiate better terms and do business with owners in the first place.
There is a lot that business owners need to know about their credit scores, and here are some of the key points to keep in mind.
Even when a business owner plans to only use cash and never borrow, credit scores still play a role. The first thing to note is that credit scores are checked all the time from various businesses. Does the business need the internet to operate? The internet service provider will run a credit check before extending the service. Is the business renting a spot? The landlord will run a credit check.
When starting most businesses, having a good credit score is going to be involved in some capacity. In fact, going back to those who don’t have any debt, that can be to their detriment as not having a credit score at all is as good if not worse as having a bad one. After all, a landlord, bank, or utility provider wouldn’t have a clue whether a business owner is going to make payments on time or is going to default at every opportunity.
Beyond that, it’s important to always have a positive or strong credit score. The stronger the score, the more likely that the terms are going to be more flexible, interest rates will be lower, and people will be all around friendlier to deal with.
A credit score is an evaluation of a person or a business’s ability to borrow and repay loans in a timely manner. Think of a credit score as the adult version of a report card in school. The better the score someone has, the more it’s viewed as a good thing or prestigious. These evaluations are dictated by credit check companies like TransUnion and Equifax and so they’re able to provide an unbiased and third-party view of a person or business’s ability in this regard.
Building credit is very simple to do and it can be done responsibly as well. Some tips to consider are:
Get started leasing or financing the equipment you need. Contact Yellowhead Equipment Finance today to get started. We’ll help you identify your eligibility, work with you to understand your options, and work with appropriate lenders to get the best solutions for your financing needs.