Business owners are increasingly leveraging their personal credit for business use, according to Nav. In fact, Nav estimates that business owners use twice as many credit cards as consumers.
The use of personal credit cards may indicate that business owners are having difficulty finding funding for their business. However, using personal credit for your business can have ramifications.
- The business owner’s personal credit score may be negatively impacted if the credit card balances rise quickly or are maxed out.
- A lender will look at a business owner’s personal credit as an indication of how well they will manage their business finances.
- A low personal credit score may prevent a business owner from securing the business credit (such as lines of credit or business loans) needed to start or grow the business.
In the article “How to Establish and Build Business Credit,” Nav offers eight steps for establishing business credit. The steps include opening a business credit card, paying on time, and monitoring your credit report.
Once business credit is established, a business owner can begin building business credit by making early payments and being sure that the business credit card is reporting to all commercial credit agencies.
Read more and watch Nav’s video at https://www.nav.com/resource/how-to-establish-business-credit/.
Nav is a free resource to help small business owners better understand and manage their credit. Learn more about Nav at nav.com.