Can You Grow a Business Without the Best Credit Score?

Why the Best Credit Score Is Not Always Required for Growth

The best credit score is an understandable goal if you're an overachiever at heart. But an obsession with earning the perfect credit score could potentially hold you back.

Are you afraid to take advantage of valuable credit card offers because you don't want to risk any potential damage to your credit score? If so, you could be depriving yourself out of some attractive opportunities to earn points and miles.

Turning an excellent credit score (over 800) into a perfect score can also be difficult. In fact, it's a lot easier to turn that great score into a lower one if you follow the wrong advice on credit improvement. Remember, earning the perfect credit score may feel nice, but it won't actually get you materially better rates on loans, so aim for a score of 760 or above, and that might just be good enough.

Funding Options for Owners Without the Best Credit Score

If you don't have the best credit score right now, you should look into asset-based or revenue-based solutions. These choices put the future of your business ahead of the mistakes you've made in the past.

• Revenue-Based Financing: This is a popular choice for businesses that do a lot of transactions. In exchange for a percentage of your future daily sales, lenders give you an upfront amount. The lender may be more interested in your income than your VantageScore because they get paid when you do.

• Equipment Leasing: Need a new delivery truck or a commercial oven? The asset itself is collateral in equipment financing. This makes it less likely that the lender will lose money. You can often get these loans even if your credit score isn't great because the lender can take back the equipment if things go wrong.

• Microloans: These are loans that are backed by the SBA or local non-profits and are made for people who don't have access to traditional loans. These programs usually have a mentorship part that helps you build credit as you grow.

• Merchant Cash Advances: This is a quick way to get cash. But it's the most expensive way to go. Use this only in short-term emergencies where the speed of capital is more important than the high cost.

Some of the Top Business Credit Cards for LLC with Bad Credit

If your credit file isn't where you want it to be, a revolving line is one of the best ways to get it there. Looking for business credit cards for LLCs with bad credit is a smart move that lets you pay for things you need every day while showing issuers that you are trustworthy.

• Secured Business Cards: These are one of the easiest LLC business credit cards to get with bad credit. The deposit you make is usually equal to the credit limit. Therefore, the likelihood that the banking institution approves a borrower with a bad credit rating is higher because the financial institution's credit risk is minimized through the deposit.

• Store-Specific Credit Accounts: Many hardware stores and office supply stores offer the option of opening credit accounts for businesses. These rules are usually more flexible than those regulating the use of a credit card. Regularly using these for small purchases is a good way to build credit as these companies report to the credit agencies on timely payments.

• Corporate Cards Without a Personal Guarantee: Some modern fintech firms don't engage in the usual hard inquiry on one's credit report. Instead, they let them connect to their bank account to verify their income. It's a great way to get credit score metrics for your business without putting your own three-digit number at risk.

• Cards with Cash Back Rewards: Some business credit cards for LLCs with bad credit even entitle you to a small amount of cashback on items such as shipping or gas. If you can pay off your credit card debts fully every month, you won't end up paying high interest, and you can use those rewards to reinvest in your business.

• High-Limit Credit Builder Cards: Certain credit builder tools are made to help you get more credit. If you keep your credit utilization rate low on these cards, lenders will know that you are ready for bigger, more traditional loans in the future.

Why Consistency Is the Best Way to Build Credit Score Results

You don't have to choose between growing your business and getting your finances in order. You can do both things. You need to use two different strategies for this. As you use other sources of money to buy more inventory, you should also be looking for the best way to build your credit.

A mix of discipline and strategy is the best way to build your credit. The first step is to mix up your credit. If you only have credit cards, you might want to get a small personal loan or an auto loan to show that you can handle more than one type of credit account. Experian Boost and other modern tools can also help by adding utility and phone payments to your credit report. This can give your numbers a small boost.

Trading Higher Interest for the Best Credit Score in the Future

There is a price for not having the best credit score. Borrowers with lower scores are upgraded to higher credit risk levels. Therefore, the lenders charge a premium on interest rates to cover that risk.

So, does it mean you should wait? That depends on the opportunity. However, if you are borrowing just to stay afloat, the high cost of debt can sink you. Never forget to calculate the total cost of the loan against the growth it will bring in the projections. You don't need a perfect credit score to make a math-based smart decision for your company.

Conclusion

Building a successful business is a long race. Credit scores are helpful but not as important as cash flow, which are the ultimate growth drivers. Don't let a less-than-perfect score stop you from getting the money you need to grow. To maintain momentum, all the tools at hand should be used, including business credit cards for LLC with bad credit and revenue-based financing.

As you get older, keep thinking about the best way to build credit score high. As a rule, pay your bills on time, keep your debts low, and check your reports for mistakes. Eventually, the work you do will help you get the best credit score so that you can borrow money at the lowest interest rates. Keep your mind on your vision, your customers and your income until then.