by Thu Nguyen

Created on: August 23, 2010

Credit card debt is one of the leading factors which paralyzes a person to move forth. It can damage one mentally as well as spiritually as it slowly affects our self-worth in the material world. With that, the same analogy can be applied to businesses as well.

By keeping your business credit in good standing, it helps you become reputable to customers and vendors. Besides, it is your personal credit history which is needed to obtain business financing to start with. So if there’s no track record on your report for your business finance, that extra money you might need may be a bit harder to ask for because banks are now more tighter than ever with handling out loans.

What can you do then to keep business in transit? With a little consideration with what your new credit account may be used for and some ways which you can manage it, here are some thoughts on how you can responsibly use credit cards for your business.

+ Before Opening An Account +

Most credit reports are obtained through the three main credit bureaus - TransUnion, Equifax and Experian. However, businesses are calculated differently. Your ratings can further advance from the following:

- timeliness of payments
- multiple accounts in good standing
- establishing a profile yourself with the different credit bureaus
- asking vendors to report your payments

Before you even start out with an account, consider your finances that it aligns with previous federal reportings - i.e. your income tax, and how much you may need. Too much might not be good and too little means going back to the bank. From looking at your books, you can determine what is a reasonable amount to start.

You also want to consider applying at your local bank as it is a safer choice to begin with. This is beneficial when going far will mean more time lost and business days that might halt just because you cannot resolve a financial matter on time. However, keep in mind that it is your vendors here who will keep you in business. They are the ones who keep your credit rating good. So establishing a relationship with them by asking them to report your payments to the credit bureaus will keep you both in business for a long time.

+ Managing Your Your Account +

As a business owner, your business credit card can sometimes be mistaken as your personal credit card. So keeping it in good standing can become a challenge thereon when there are non-professional factors involved. With that, there are a few rules and more points to consider so that you won’t run into the hassle of losing track of your expenses:

- avoid co-mingling and leave out personal spendings
- ask if your card offers a year-end statement summary with easy itemization of your spendings
- check your mail for the latest changes in credit card policies
- find the rewards that helps you get more from your spendings
- manage and track what your employees spend
- take on more debt if only it brings in more revenue

Avoid the collections and even going bankrupt because you haven’t considered how you’ll manage your business credit card. By using them responsibly only when you need them and for business expenses which helps bring in more profits, you’re building a great habit. This will in turn keep you above in ratings and help you stay in business for a long time.

Resources:
How to Responsibly Use Credit Cards For Your Business
Using Business Credit Cards Responsibly
6 Steps to Effective Small Business Credit Card Management

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