As an architect, it is key that you have outstanding credit. When your clients are ready for a project, many don’t realize that you will be the one to apply for the planning permits, negotiate with and manage contractors and control site budgets. All of this requires stellar credit.

But, what if you are just starting out? Or, what if you had some bumpy times during the last recession, and your credit is less than stellar? Pine Advisors, a firm that specializes in helping small business owners who have debt problems, has some suggestions to help you get good credit or repair your credit.

Using Personal Credit Cards for Your Enterprise

One mistake that many small business owners are forced into in their startup phase is to use personal credit cards to fund their first year. This is a mistake if you end up carrying a balance. You are personally liable if you default on your personal credit card when it is used for a business purpose.

Also, the interest rates on personal credit cards as of November of 2019 hovers around 21 percent, according to The Balance. If you carry a balance at an interest rate that high, it will be very hard to pay off the credit card. The high interest rates will also harm your cash flow.

Business Credit Cards

Business credit cards will help you develop business credit, but they tend to currently carry almost the same interest rates as the personal credit cards, so it is best to only use them when you know you can immediately pay down the balance, so you don’t get stuck servicing high interest rate payments.

Another caveat in using business credit cards and carrying a balance is that most business credit cards have a personal liability clause that will hold you personally liable in the event you default on the loan. So, your personal credit could be impacted, and you run the risk of having your wages garnished if you are sued after defaulting on these cards at such high interest rates. Thus the advice to only use business credit cards when you won’t carry a balance.

Pick Creditors That Report Your Business Credit Activity

Experian suggests that, whenever possible, you establish credit relationships with companies who report to the credit agencies.

Pay On Time

You need to make your payments on time because that is one of the largest determining factors of your credit score. When you cannot make a payment on time, call your creditor as soon as you know and explain the circumstances and give a timeline for payment.

Be Careful of Credit Utilization

Just because you have a set amount of credit available through different creditors, it is unwise to max it out. You need to utilize only a portion of your available credit, or it will lower your credit score. Creditors consider it risky to lend to borrowers who use up all available credit.

According to Experian, they will not generate a credit score for your business unless you have at least one loan outstanding or already paid off.

Pine Advisors suggests that architects and other small business owners develop business credit through careful planning and never carry a balance on a business credit card. If your architectural firm is looking for a lower-interest source of business credit or information on how to dig out of heavy business debt, call us. We are here to help.