A healthy credit score is not only a consideration for individuals, but it is also important – perhaps even more so – for business owners to make sure their interests are supported by strong financial foundations. A credit score is a key aspect of this. In fact, maintaining and improving a good credit score should be a priority for anyone serious about the future success of their startup.
Why is this important?
In simplest terms, a good credit score provides confidence that you are in a secure and stable financial situation. This is essential for both you and for your stakeholders. It puts you in a strong position to secure the best value business loans, for example, which can be invaluable for startups to continue enjoying healthy growth.
What can you do about it?
Fortunately, it is possible to be proactive in maintaining a good credit score by following some fairly simple guidelines and good practice. Generally speaking, it is about sound financial management, being organized, and acting with integrity.
Here are a few specific ideas for looking after your own score:
- Pay your bills on time. It sounds simple, but it makes a significant difference. There is a temptation to view late payment of bills as a way to save money, but this is dangerously short-term thinking. Developing good habits around paying bills, and even applying automatic processes where possible to help guarantee they get paid, will, over time, contribute in a big way to a good credit score.
- Maintain a regularly paid-off credit card. This is a great way of demonstrating that you are a responsible business owner capable of managing debt. It shows that you understand the potential risks that are inherent in incurring debt, but that you are able to mitigate these risks suitably and use credit options wisely in order to facilitate healthy growth for your startup business.
- Utilize short-term loans. Short-term loans can, in fact, be a positive thing, as long as you are able to pay them off in time. Business experts such as Ian MacKechnie generally agree that short-term loans can open doors and facilitate new opportunities. They can help to get a company through difficult times, which is something MacKechnie, who famously brought back the Amscot organization from potential collapse to an annual revenue of $85 million, understands very well. The key is to be realistic and sensible with your options. If you are, there is no reason why short-term loans should not be part of your financial toolkit.
Preparing for the future
Sound financial management is a key skill for any business owner, including those with responsibility for a startup. As a business grows and evolves, it is critical to maintain this attention to financial matters, and a good credit score is a good indication of how well you are doing this. It also serves as something of a reward for such efforts, as a healthy credit score will open up new opportunities and help to provide the foundation for a successful and prosperous future.