The 5 Things You Need to Do to Get Your Credit in Shape to Start a Business

The 5 Things You Need to Do to Get Your Credit in Shape to Start a Business

Advertiser & Editorial Disclosure

Whether you are hoping to start a business or grow yours, a credit check-up is a great idea. Even if you don’t need financing now, getting your credit in good shape now will give you one less thing to worry about. And if you do need a loan, line of credit or even a business credit card, having strong personal credit will be a must — especially in the early days of your business when it doesn’t yet have a successful track record to show to lenders.

Here are five steps that can get you get your credit in shape to start a business.

1. Check Your Credit

It goes without saying that you need to know what’s in your credit reports, as well as get an idea of your credit scores. You have to know where you’re at before you can determine what steps you need to take.

You can get one free copy of your credit report from each of the three major credit reporting agencies — Equifax, Experian and TransUnion — every year at These reports don’t come with free credit scores, however, so you’ll need to go elsewhere to get your credit scores if you don’t want to pay for them. (Here are 150+ places you can get your credit scores for free.)

Many business owners rely on their personal credit scores when they’re just starting out, but eventually you will want to establish and build a business credit score.

2. Pay Down Credit Card Debt

Personal credit card debt doesn’t have to stop you from starting a business, but if you can pay it down you won’t have to worry about whether you’ll be able to make your payments if your business takes longer to take off than you expected. Plus, lower balances may benefit your credit scores. Debt usage (utilization) is one of the top factors that can impact credit scores. Lower balances can often result in higher scores.

Can you start your business as a side hustle, while you keep your day job? You can use the revenue it produces to pay down debt faster, as well as get a feel for what it will be like to run your business, without as much risk.

Financial Health—signup free

Pro Tip: Take charge of your financial health today with a FREE Nav account. We'll protect and monitor your personal and business credit, so when it comes time to find financing you're prepared on all fronts.

3. Consolidate Remaining Debt

If you can’t pay down your credit cards, consider consolidating with a low-interest balance transfer offer or a low-rate personal loan. It can be easier to qualify for a credit card or loan while you still have an income from a day job, but if you don’t, keep in mind you can often include income from all sources, including your spouse’s income if it is available to pay the debt. Locking in lower rates may help you pay off debt faster, since a greater portion of your payment will go toward principal rather than interest.

4. Tackle Negative Items

If your credit reports lists unpaid collection accounts, judgements or tax liens — or if you have filed bankruptcy in the past few years — you’re probably not only dealing with a lot of financial stress, but your credit is likely suffering as well. These types of items are seriously negative and can bring down your credit scores significantly.

If you haven’t checked our credit reports recently, you may be in for a pleasant surprise: millions of judgments, tax liens and collection accounts were removed from credit reports in 2017 and 2018. (You can learn more about the removal of judgments here, the removal of tax liens here, and more about the removal of collection accounts here.)

If you negotiate and settle a collection account for less than the full amount, it won’t automatically mean it will be removed from your reports, but some credit scoring models will ignore collection accounts where the balance is zero.

As negative items such as these become older they generally will have less impact on your scores, provided your credit reports list accounts you are currently paying on time.

5. Get a Business Credit Card

The moment you launch your business, consider getting a business credit card. This will allow you to separate business and personal expenses, making it much easier come tax time. In addition, most business credit cards do not report to the owner’s personal credit reports unless they default. This means you may be able to separate your business and personal credit.

Finally, most business credit cards help build business credit. No matter where your personal credit stands, you can get a fresh start with business credit. Building a positive business credit history can contribute to the success of your business. You can check your personal and business credit scores for free on Nav.

Brex Card for Startups

Perfect for tech companies and early-stage corporations with professional funding (U.S. EIN and at Learn More

GM BuyPower Business Card™ from Capital One®

3% Earnings on purchases at gas stations, restaurants, and office supply stores; 1% Earnings on all other Learn More
Platinum Delta SkyMiles® Business Credit Card from American Express
American Express is a Nav Partner
Terms, Rates & Fees

Platinum Delta SkyMiles® Business Credit Card from American Express

Earn 5,000 Medallion® Qualification Miles (MQMs) and 35,000 bonus miles after you spend $1,000 in purchases on your Learn More
View More Offers

Rate This Article

This article currently has 1 rating with an average of 5 stars.

Have at it! We'd love to hear from you and encourage a lively discussion among our users. Please help us keep our site clean and protect yourself. Refrain from posting overtly promotional content, and avoid disclosing personal information such as bank account or phone numbers.

Reviews Disclosure: The responses below are not provided or commissioned by the credit card, financing and service companies that appear on this site. Responses have not been reviewed, approved or otherwise endorsed by the credit card, financing and service companies and it is not their responsibility to ensure all posts and/or questions are answered.

Leave a Reply

Your email address will not be published. Required fields are marked *