Whether you're starting a new business and looking to get your foot in the door everything from your career milestones to your assets or you have a settled business, credit score affects everyone.
Two burning questions:
Is a good credit score an equally important factor across various business stages?
How can a healthy credit score affect those looking to start a new business or even cultivating their existing company further?
Below, I've broken down some of the core dealings revolving around a good credit by highlighting factors which affect credit score and influence your market space.
You will see how much credit smart practices play an important role into your business financial standings.
Career Building
Business credit score establishes a strong foundation for career building. It determines the financial risk of your company.
Why is it important to have a solid business credit score?
- Business partners, suppliers, and vendors decide the risk possibilities with your company by looking at the credit score.
This is crazy:
Alarmingly, two third of the millennials ( those aged 23-35 in 2012) owe at least one source of long-term debts. 81% college-educated have at least one source of long-term debt.
People who build their careers successfully implement these financial decisions religiously:
They always pay on time and review their credit profiles from time to time.
They borrow carefully and don't use too much available credit.
No matter what the credit situation a modern entrepreneur face, the important factors for observing good credit remain same.
Avoid excess debt and subsidize any existing debts using the income flow you have available as much as possible.
Stay away from loan default, identity theft, and bankruptcies to protect your score.
Title loans, tax return advances, and similar cash payouts usually come straddled with interest rates that can rapidly add fuel to an ongoing financial fire.
Cultivating your Capital
If you can count yourself among the most fortunate, the middle-ground years of your business will mostly comprise of strengthening your existing networking footholds and working incrementally towards greater horizons down the line.
Most professionals will likely assure you that accumulating good credit at this point in your business's life cycle won't revolve around any major financial secrets.
The fundamentals of building up a strong credit score throughout a financial midpoint will remain effectively the same as they would at any other point.
Sticking to the best practices that demonstrate financial stability will likely remain your best bet throughout these core years of business development.
Diversifying your Investments
It would be nice if only handling finances for an extended period meant assumed good financial standings were added up to an individual's credit score.
Unfortunately, those who have been in the game for a considerable length of time will often find that this isn't the case.
Planning for some of the most paramount long-term investments of a business can often require evidence of good credit history more than ever. It will remain important to have the numbers to back you up.
Common hurdles for those looking to lock down the best investment strategies can often include outstanding debts and more.
Essentially, the factors to watch out for when accounting for your credit score can remain fundamentally relevant, and mostly the same, regardless of your business experience.
Looking Towards the Future
As you make your way into a long-term strategy, you will realize good credit score doesn't come naturally because it requires smart effort on your part.
A series of financial missteps throughout the pivotal years leading up to a self-sustaining business can cause just as much of a negative splash as they would if you were starting things off the ground.
Want to know the best part?
Experience gained through the ups and downs of market cycles provides great insights for keeping a healthy credit score.
Keep your financial decisions prudent, and stick to a plan that looks towards long-term financial goals in the years and decades to come.
Look:
Dun & Bradstreet PAYDEX score, ranging from 0 to 100, measures company's swiftness in paying payments to suppliers and vendors.
A score of 100 indicates business settles the payments 30 days prior the settlement date on a consistent basis.
A score of 20 signals business settles the payments 120 days after the settlement date on a consistent basis.
So, higher your PAYDEX score, the better is your company's future.
It's also worth noting that avoiding checking up on one's credit history throughout their business's development can also spell trouble.
So, regularly check up your credit standing to keep an eye out for errors and fraud.