credit cards

Finding the best business credit cards

Getting the best business credit cards can mean the difference between success and failure for many entrepreneurs. Startup businesses rarely qualify for small-business loans, so many rely heavily on credit cards to get things going. The Kauffman Firm Survey estimated that for every $1,000 in debt a business accrues, its chances of failure increase by 2.2 percent. To ensure you don't run that risk, get the best business credit cards possible right from the start.

A startup business is much like a person who has no credit history whatsoever. Thus, the creditworthiness of the business ends up being the creditworthiness of the owner -- you. Before opening a business, entrepreneurs should approach their credit the same way that they would before taking out a mortgage or other large loan.

Creditworthiness first

Months before you apply for business credit, pull your personal credit report. Examine your report carefully for possible errors that may detract from your credit score. You should also focus on paying down your credit card balances. An important component of your credit score is the difference between your credit card balances and your limits.

The period before you begin applying for a business credit card is neither the time to close accounts nor open new ones. Closing existing accounts will negatively impact the length of your credit history, which will lower your score. Each time you apply for new credit your credit score takes a hit, even if you are approved for the new line of credit.

The key to getting the best business credit cards possible -- and to increase your likelihood of success -- is to improve your personal credit standing before you begin shopping for credit cards.

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