Are you new to the business world? Are you familiar with how your business credit affects your business? This article will discuss the most common myths about it and the truth behind them. Let this be your guide to determining what really counts and what doesn’t in your business credit.

Myth #1: Small business entrepreneurs or home-based business owners don’t have to worry about their business credit status.

Small businesses may deal with small business lenders, but these lenders look at your credit profile the same way. All types of lenders, whether large corporations, prominent banks, small lenders, even individual lenders, determine a business’s creditworthiness through its credit profile. Every time you apply for a business loan, your potential lenders will review your credit history, regardless of the size of your business.

In fact, most financial firms today process loan applications with the help of an automated system. With this system, the decision to approve or deny an application is based on the company’s credit rating. If you miss the cutoff, your application will be immediately rejected. Therefore, all business owners should pay attention to how they maintain their business credit history, whether they are running a large corporation or just a small business.

Myth #2: There’s really no need to check my business credit profile often.

All transactions you make between the vendors, lenders, investors and insurers you deal with are reflected in your credit report. Commercial credit reporting agencies update their files daily, and you’ll want to make sure your own report is accurate. Just as you need to regularly review your personal credit report to make sure all the information in it is correct, the same is true of your report.

Myth #3: Startups don’t have to be as concerned about their credit as long-standing businesses.

As we’ve said, size doesn’t matter when it comes to building great credit. Likewise, even if you’re just starting out, it’s a good practice to keep a close eye on your credit profile. In fact, you should be very interested in monitoring your credit report while you are in the early stages of establishing your credit.

Myth #4: Your cash flow has nothing to do with your business credit status.

When you apply for business credit or a business loan, your approval depends on how good your business credit profile is. Even if you are approved, the interest rates, credit limits, and terms that lenders and insurers will give you depend on your business credit profile. Certainly paying lower interest rates, getting higher credit limits and enjoying certain financial advantages offered only to businesses with excellent credit will affect your business’s cash flow.