The Importance of Business Credit and How to Use It
Robins Financial Credit Union is dedicated to our mission to be Member Focused, Financial Partners, Community Proud. We empower our members with the financial knowledge and resources they need to make informed decisions and achieve their financial goals.
Building strong business credit can unlock opportunities for growth, improve your financial stability, and establish your business as a trustworthy entity. As your trusted financial partner, we’ll help you understand why business credit matters and how you can build and use it wisely.
What Is Business Credit?
Business credit is a financial profile that reflects your company’s creditworthiness, much like personal credit does for individuals. It includes your payment history with vendors, lenders, and suppliers; your credit utilization; and how long your accounts have been open. Having strong business credit can help your company:
- Qualify for better financing terms
- Secure higher credit limits
- Establish favorable terms with suppliers
- Separate business and personal finances
- Build credibility with potential partners and investors
What Makes Business Credit Important?
Business credit can be a powerful tool to help the growth of your business. Let’s take a look at some of the reasons why business credit is so important.
- Access to Capital – Access to capital is essential to grow and sustain your business. Whether you need to invest in new equipment, hire employees, or manage day-to-day operations, having strong business credit makes it easier to qualify for loans or lines of credit with favorable terms.
- Lower Insurance Premiums – Some insurance providers use business credit scores to determine your rates. A solid credit profile can help you save money on business insurance.
- Better Relationships with Vendors – Vendors will often offer better terms to businesses with good credit. The flexibility of more favorable terms can significantly improve your cash flow and strengthen supplier relationships.
- Business Continuity and Growth – Sometimes unexpected expenses can arise. Business credit will allow you to navigate emergencies and seize new opportunities without dipping into personal funds.
- Professionalism and Credibility – A business that can demonstrate responsible credit use is often viewed as more established and trustworthy, making it easier to attract partnerships and potential clients.
How to Build Business Credit
Building solid credit for your business doesn’t happen overnight. But, with consistent, smart financial habits, you will get there. Here’s how:
- Establish Your Business Legally – Register your business as a legal entity (LLC, S Corporation, etc.) and get a federal Employer Identification Number (EIN). Next, open a business checking and savings account to separate personal and business finances.
- Open Accounts That Report to Business Credit Bureaus – Once you've established your business, you can apply for credit lines that report to business credit bureaus. These could be vendor accounts, small loans, or credit cards – like the Business Visa® Credit Card from Robins Financial Credit Union. Enjoy special low rates and exclusive perks that will unlock a wealth of opportunities for you and your business.
- Pay Bills On Time & In Full – Payment history is one of the most influential factors in building business credit. By making your payments on time and ensuring you pay the full balance, you can build a positive credit profile for your business.
- Keep Credit Utilization Low – Financial experts recommend keeping your credit utilization to less than 30% of your available credit. High utilization can negatively affect your score and signal risk to lenders.
- Monitor Your Credit Reports – It’s important to regularly check your business credit reports for accuracy and take steps to dispute any errors you may find.
Smart Ways to Use Business Credit
Having access to business credit is only beneficial if you use it wisely. Here are a few helpful strategies to keep you on track:
- Finance Equipment or Inventory – Instead of depleting your cash reserves, you can use business credit to invest in essential equipment or purchase inventory during high-demand seasons.
- Bridge Cash Flow Gaps – Cover short-term expenses while waiting for client payments to come in. This is especially useful for service-based businesses with long billing cycles.
- Separate Business & Personal Finances – Using a business credit card can help keep personal spending separate, which simplifies bookkeeping and protects your personal credit.
- Track & Categorize Spending – Many business credit cards offer tools to help you analyze and categorize expenses. This can be useful to stay on top of your business budget and prepare taxes.
Ready to Get Started?
If you’re ready to start building your business credit and are looking for reliable, cost-effective tools to help manage your business expenses, our team here at Robins Financial Credit Union is ready to help.
- If you haven’t done so already, open a business checking or savings account
- Make an appointment at your nearest branch to open your business credit card
- Visit our website to view our full suite of products to help your business succeed
Business credit is more than just a score – it's a gateway to financial flexibility, credibility, and growth. Whether you’re just starting out or looking to expand, cultivating a strong credit profile is a smart move for your business’s future.
Get ready to take control of your business credit today!
Read our other blog articles to help you gain the financial knowledge you need to succeed.