Small Business Credit - Importance of Business Credit Cards

Taking the rate of interest of repayment into consideration

, credit card money is not cheap, yet it is fast and easy to acquire. This is the reason big credit card companies do all that is in their power to attract the attention of small business owners. It is a common practice for the credit card companies to use cash back bonuses, rewards of airline miles or free trips and free download of your tax record through software like quicken, as a tool of promotion.

Risks in using Business Credit Cards

All this being said, small business credit doesn't come without risks and obstacles. Like any other field of business, you need to face trouble. If these troubles are not taken care of at the right time, you could face an unnecessary huge loss. But if precautions are taken to know how to handle such hazards, you can make your business credit building process smooth.

Take this for example; many first time users of business credit cards are not aware of the fact that for the first few years, till your business is established, your personal and business credit report will remain united. This is because, as your business has just begun, you would not have a registered credit profile with business credit agencies like Dunn & Bradstreet. If you are experiencing a financial glitch in your business and miss or delay a payment, it will be recorded in your personal credit report.

Risk of High Debt to Income Ratio

Take another instance for a clearer understanding; if you have accumulated some amount of debt in your credit card, it will be reported to your credit profile. While this is not a bad thing in business it will increase the gap between your income and debt making the debt to income ratio higher. This is because while you repay the debt with the profit gained through your company, it will not be recorded in your credit profile. This way you will lose the ability to get instant approval for loans and other financial assistance and benefits from lenders.

If you wish to solve these problems and have a high business credit score, do not hesitate to take the advice of reputed business credit services who can lend a helping hand through their years of experience. This way without any doubt your small business credit will improve.

Small Business Credit - Importance of Business Credit Cards

By: Sherry Gain

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