Why Credit Score Of Any Business Is A Vital Entity?


If you happen to have the habit of keeping track of every personal earning and spending, then you are already good at counting your score for personal credit. Now those same numbers that you may have been used to, will spin you off the loop when trying to track the Business Credit Score. Clearly, the markers here are not at all similar. The Personal credit happens to be rated on a scale of 300 to 850, where 650 or more is considered better credit score. However, credit scores for business are calculated on a scale of 1 to 100, where 75 or more is deemed a better score.

What can go wrong?

Well, a lot can possibly go wrong with the business funds, if the credit scores of the business go downhill. Some of the bad scenarios are mentioned below.

  1. No Further Business Credits: Bad credit score for business could result in no further new business credits from lending agencies. They would need a showcase of good revenue generation from business, which means paying the dues on time. Without that the credit score of business will obviously go down and it will be noticed in the business credit score. Indeed, something that no business owner would like to happen to him/her.
  2. Current Investors Bailing Out: The current investors may also want to bail out of the sinking business, in rush to save themselves. It is not a strange phenomenon because every investor invests to earn and if his/her primary investment amount is not yielding returns, he/she would not want to continue investing. Business Accounting can clarify all the doubts of the investors and also show him/her the clear picture of the future potentials of their investment.
  3. Share/Stock Holders Selling Out: Once, the credit scores for business is made public to the share/stockholders, and if it is not favourable; then the obvious will happen. The people holding equity in the business will start selling out there shares at the best price that they could. It means lower than what they bought it for. This will further drop the value of those shares and thus the business may lose more trust

Thus, maintaining a fine credit score for the business is extremely vital for the benefit of the business itself as well as for the people involved in it. There is no shortcut to succeed in making an excellent credit score for business; other than calculated business moves.