Your Credit Score and Your Business
The business world is highly competitive, and business owners can sometimes feel the fragility of their businesses in this environment. Finances and reputation are two important things that business owners should protect. If you make one wrong move as a business, then you cannot achieve your business plans and your bottom line can be at stake.
How is your personal credit score? Your personal credit scored can affect the status of your business. Your business can be affected by your credit score in the following ways.
Your business can be affected by your credit score in a number of ways. One of these ways is that it affects our business loans.
When there is an application for loan, banks and lenders check personal credit scores when factoring whether to give you a loan or not. It does not matter how well your business is doing, if anyone of the owners has a low credit score, it means that there is a great risk and financial burden to that individual which could affect their business operations. And this is the reason why financial institutions turn down new loan applications if one of the individuals associated with the company has a low credit score.
There are lending institutions, however, that don’t check on personal credit scores. Some lending institutions will still approve loan applications for businesses who are operating with sustained and consistent cash flow. A business’ history of revenue will be checked to enable them to determine if they will approve the loan application or not.
If you are getting your business finances from individuals like anonymous donors or venture capitalists, your personal credit score will not in any way impact their moves. As long as you have a functional business plan or if you are already doing a steady amount of business, many individuals or investors will grant the loan the you need.
There are people who are not aware of what their personal credit score is. Through free and premium services designed to keep you updated on your credit score, you can actually know your standing.
There are three major credit bureaus that do this service for business and individuals. Three three major credit bureaus are Experian, TransUnion and Equifax. They all have slight differences when they calculate individuals’ credit scores and sometimes that results that they display are radically different. Before your loan application gets approved or not, lender evaluate all three credit ratings.
It is then important to improve your credit score if at present it is not in its best form.
It is true that you personal credit score can impact your business and its success. Make sure to keep your personal finances intact if you want to ensure that you have access to credit and loans when you need them. Although it takes time, effort, and money to rebuild a low credit score, it is possible and well worth it so that you business will survive the competitive marketplace.