Owning your own company is very exciting but for most companies, a line of credit is something that you have to think about. While it may be simple to open a small credit card that usually will only help to get you started and at some point you are going to need to worry about the business line of credit. When the company is larger than just you then the company needs a separate line of credit and with that, it means that the company is going to have a different credit score than what your personal credit score is. But while that is good it is also very hard because when a company is just starting out there is a lot of ups and downs in the company. This can lead to some late payments and the credit score that you were trying to build going down the drain for the first few years.
Thankfully after you get past the first few years the company tends to be less volatile and you should have enough banked that you are stable in the company and it is able to sustain itself at all times no matter if there is a low month or not. Once you get to that point you start to realize what a toll those first few years of running the company took on the companies credit score and may even feel overwhelmed on how to clean that up so that it does not negatively impact the future of your growing company. The first thing that you have to realize is that business credit is a bit different than personal credit and that is not just because there are more zeros attached to the number. The credit belongs to not just one person and business is meant to bring in much more money than just what one person would bring in. So because of the larger amounts and loans that you had to take out for the company to start with you may need to get a professional involved.
How You Can Clean Up Business Credit
Thankfully there are professionals that can help you to know how to clean up business credit. The first step in that is to hire an accountant that knows a lot about credit scores and you might want to take them on for a long while or even keep them forever after as they can be an invaluable tool that makes your life as the owner a lot easier. What the accountant will do is take the time to go through the credit score and the debt that the company owns. They will find out first if you have anything that is in collections for the company as that will hurt the company the most. After resolving anything that was still in collections then you can address the debt that is left in the name of the company. A credit card that gets paid off at the end of every month is not something to worry about and is something that will help the company in the long run. But other and bigger debts usually will have to go in order to get the credit score up for the company. The accountant will then look at your business plan and where the company is so that they can help you to pay off the loans that you have for the company and then make a plan for it to grow. Throughout the whole process, the accountant will talk to you so that you learn how to clean up business credit too.