THURSDAY, MARCH 26, 2020
 Running a small business can allow you to double your income, or better. But it also doubles the number bills you're paying each month, the number of accounts you need to juggle and the number of cards you need to carry in your wallet. It's a fair trade-off for being your own boss. But you have to be prepared to spend a little more time with a calculator in hand at the end of each month. One area where you're going to see your paperwork doubled is business credit. Not only do you now have a personal credit score, but you also have a business credit score. They will both affect what you pay for your general liability insurance.
How's A Credit Score Calculated?
Your credit score is one of countless factors in determining what you're paying for general liability insurance. The data your insurer uses is all about correlation, and they've generally discovered that poor credit means higher risk. It may not always be the case that someone with poor credit will file more claims than someone with good credit. In fact, fixing your credit may be one of your main goals in starting a business. But insurance is all about probability, and the data shows a higher probability of frequent claims and late payments when insurers cover someone with bad credit.
What If You Don't Have Business Credit Yet?
The good news is that a lack of a business credit score won't bar you from buying general liability insurance, nor will it prevent you from getting a decent premium. But a good business credit score might net you some solid discounts. So, even if you prefer to make all your business payments up front, it might be a good idea to start building that score.
You can start building your business credit by following a few simple steps:
- Establish a separate LLC
- Register for a federal EIN (Employer Identification Number)
- Start a bank account in your legal business name
- Have a dedicated phone line for your business
Once this is settled, you can register with a business creditor and start building your score the same way you do your personal credit rating.
Insurance is about peace of mind, and that applies to your insurer as much as it does to you.
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