How to Protect Yourself from Cuts to Your Business Credit Card Limit

Over the past couple of years, the credit card industry seems bent on shaking up the credit markets so that it comes out in their favor. For small business owners with business credit cards, there has been virtual tidal wave of often unexpected changes- from cut credit lines to closed accounts- that seems to blindly strike irregardless of credit score and payment history.


If you use a business credit card extensively for short-term financing in your small business, then take heed to the following tips:

1. Expect the unexpected. These days, even if you have sterling credit and you’ve been using the same credit card for several years, you shouldn’t take your credit limit for granted. There are countless stories of business owners who watched their credit line virtually disappear without warning or provocation. Thus, pay attention to your account.

2. Be aware of what can trigger a change. There are several common factors that can result in a reduction of available credit: a sudden, significant change to your credit score, a large unusual purchase, “too much” activity (i.e. you keep using the card so you end up staying close to your current credit limit), and “too little” activity (i.e. you don’t use the account so often).

3. Have a backup plan. If you are using your business credit card heavily and/or are dangerously close to your available credit limit, then consider using either a backup credit card (just make sure to make a few charges with it so it shows recent activity) or secure another means of quick, short-term financing, such as business cash advances and accounts receivables financing.

In short, with a little effort and due diligence you can stay one step ahead of any unexpected curve balls your credit card company may throw you.

How Your Credit Profile Affects Your Business

We all know that good credit is highly sought after. And should we forget, those catchy little jingles are there to remind us, prodding with “free,” instant online credit reports. But once you find out what your score is, you may still be left wondering what exactly it’s good for, and more specifically, what does it actually mean for those who own their own business?



Your credit score is especially influential if you’re a small business owner. In today’s competitive market, poor credit can adversely affect your ability to conduct business in a number of ways: it can result in difficulty securing necessary financing and better interest rates, among other possible problems. Here is a brief rundown of some ways in which your credit profile can affect your business:

Surety Bond Premiums

Surety bonds act as risk mitigation tools to help ensure that business owners and other professionals follow all licensing requirements and industry regulations. Because a surety provider could potentially be liable for your inability to perform, they charge an issuance fee directly related to you credit score, which is usually a pretty accurate indicator of an individual’s reliability. Having a credit score above 700 will typically allow you to purchase a bond from a premium underwriter who can provide a bond at a competitive rate. Applicants with credit scores below 700 usually have to work with underwriters who will execute bad-credit bonds. These principals will pay a significantly higher rate that could range anywhere from 5 to 20 percent of the bond’s penal sum. Sometimes high-risk principals must also provide additional collateral upfront before securing the bond.

Loan Interest

Because your ability (or inability) to pay off past debts in the past directly affects your credit score, banks heavily consider your credit score when determining whether or not to back you with a loan. If a lender does approve you for a loan, the interest rate you will pay on the loan will be directly related to your credit score. Typically, the lower your credit score, the more interest you will pay on the dollar. If you have a good credit score, you should expect to pay a much lower interest rate on your loan(s). Of course other extraneous factors may affect the interest rate you will pay, but your credit score is a major influence.


If you’re starting up a new enterprise with a partner or a group of peers, be sure to inquire into each of their personal and professional credit histories. If you cosign for a loan, the lender will consider the credit score of all signing parties. How your credit scores are treated for those going into business as together is similar to when a couple gets married and decides to take out a loan for a new home: the two credit scores are combined and then averaged to calculate an appropriate interest rate. Similarly, if you need to secure a surety bond that includes both of your names on it, the surety provider will consider both of your credit scores before giving you a price quote.

Insurance Rates

If you’re looking to purchase an insurance policy for your business or for your employees, your credit score will be taken into account so that the insurance agent can predict how profitable you will be and thus how likely you will be to pay your insurance premiums. Insurance professionals check your credit scores frequently, especially when it’s time for you to renew or change a policy. Thus, keeping your credit score in check is not only important for initial price quotes, but for maintaining your payments at low, competitive rates.

When it comes to starting up your own business, thinking about your credit score can be intimidating. But keep in mind that if you make wise and careful decisions ahead of time, you can use your credit score as a tool for your advantage.

This article was written by Kristen Bradley at, which is an agency that issues surety bonds across the nation. aims to help new business owners get their enterprises started off on the right foot. For more information on the surety bond industry, check out the Surety Bonds Insider Blog:

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How to Build Your Business Credit Rating

Having a good business credit rating is a golden key that can help open the doors of financing- whether from the bank, vendors and suppliers, or potential investors. And with the current economic environment making it harder for small businesses to get the financing they need, this key is all the more vital to the success of a business.

Here are a few tips to help build up and maintain your business’ credit profile:

Tip #1: Separate your business credit profile from your personal credit. Many business owners are unaware of this option, especially if they are running a sole proprietorship, and they finance their businesses with their own credit and assets. This can be a costly mistake, since your personal credit profile will then directly effect your business credit, and visa versa.

Tip #2: Register your business with the major credit reporting agencies and monitor reporting. Banks, credit card companies, utility, and phone companies, as well as numerous other businesses will report billing and credit information regarding your business to the major credit reporting agencies: D&B, Experian, Equifax and TransUnion. With this information, the credit reporting agencies produce reports and credit scores. Keep in mind that any information on your business’ financial status, as well as any court cases and bankruptcies will also make their to these reports. Thus, it is important to monitor these reports regularly.

Tip #3: Make good cash flow management a priority. Make it a priority to pay your bills on time. Simple idea, right? It just may not be so simple to implement- especially if business has not been so great lately. In a previous article I included a few doable tips to improving your small business’ cash flow.

Tip #4: Seek out transactions that will improve your credit score. As I mentioned above, whether you realize it or not, chances are that your business is already generating data that can be accessed by a third party to determine your business’ credit-worthiness or financial stability. You might as well specifically seek out those arrangements that will build your business’ credit profile. You can find out which businesses report to the credit agencies and make it a point to do business with them and to keep your payments on time. The credit reporting agencies themselves also offer a number or credit-building services for a fee. 

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