All you have to do these days is register an LLC and get your EIN, and you’ll be inundated with dozens of supposedly pre-approved offers for small business credit cards and emails for online credit applications. If they are used responsibly, credit cards can be a good way to build your business credit rating with Dun & Bradstreet, as well as giving you a bit of a safety net if you a big contract forces you to front more cash than you typically have on hand. Using them irresponsibly can be bad for business too.
Be careful with credit cards. If you miss a payment or go past the promotional period that roped you in with a zero percent APR, and you can quickly find yourself floundering as you attempt to pay off a card that carries a 29.9% interest rate, so pay attention to the details on your statements, and your payment due dates. If you’re going to use a credit card as part of the way that you manage your business finances, try to pay off your balance in full every month. If you know you’ll have to carry a particular charge over more than one month (ie you paid for materials for a job that won’t pay for 90 days), keep your interest rate in mind when you determine how much you’ll charge your customers. Whenever possible, secure a materials deposit, and immediately pay that amount on your credit card when the check clears.
Managing your business credit responsibly is just as important as managing your personal credit. Having a poor business credit rating can impact your ability to get revolving credit accounts with suppliers, and this can keep you from being competitive if you’re bidding on large projects or large supply orders.