Use This Powerful Strategy to Keep Your Personal Credit and Your Business Credit in Good Shape

Your personal credit is used to help you get a loan or mortgage, find and keep a job, and ensure that you have access to affordable credit when you need it. But did you know that your business also has a credit score?

It's true - businesses have credit scores in a very similar way that individuals do, and they're managed (and improved) in the same way that individuals manage their personal credit scores. If you own a business, it makes sense for you to be aware of your business credit score and to invest some time to make sure that it's healthy.

Your business credit can help you get access to affordable credit when you need it - such as a line of credit or corporate credit card, which is especially important for small businesses that rely on credit to help them smooth out the peaks and valleys of the financial month by funding inventory and payroll.

The more you focus on your business credit score, the better access you'll get to credit (including a higher amount at a lower interest rate).

So how can you focus on your business credit score?

There are several ways - you should regularly pull your business credit score to monitor it; you can use store credit cards as an easy way to get a small amount of credit to build your score; you can borrow and pay back small loans and lines of credit in your business to help build up your business credit scores.

But one of the most important things you can do is a very simple strategy that many small business owners ignore, overlook, or simply don't realize the importance of it:

You can use a separate bank account in the name of your business between your personal bank account and your business bank account.

By separating your accounts you are creating a nice clean line between your personal and business accounts - and thus, your personal and business credit scores.

To keep it easier on you, you may still want to open your business account at the same bank where you do your personal banking (so you're not juggling too many banks) but at least get a separate account.

That's the first step. From there, work at building your business credit. Ask about opening a small line of credit or getting a business credit card, then use it each month and make sure you pay it off on time and in full to avoid interest.

"Not all lenders or vendors report positive payment history to the commercial credit agencies," warns Gerri Detweiler, head of market education for Nav. "If you want to build credit, you need accounts that report to the SBFE, Experian and/or D&B." You can find lenders that report through Nav.

Not only will this keep your credit scores nice and clean and separated, your bookkeeper or accountant will also love the fact that you have separate accounts - it just makes their jobs so much easier. Plus, if the IRS ever wants to take a closer look at your personal account or your business account, it will be a lot less painful on you to hand over exactly what they're looking for without having to sit down with them to explain and defend which purchases are personal and which are business.

So if you don't yet have a business bank account, take action right now to start one today!