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. That is why business owners should protect the interests of their business financially and by its reputation. Your business plans can fail and profits affected if you make a wrong move with your business.
This brings us to the question about your personal credit score. The status of your personal credit score can greatly impact your business. Here are some of the ways that your credit score can affect your business.
The truth is that personal credit score can potentially affect your business in many ways. Business loans can be affected by your credit score.
Personal credit scores are checked by banks and lender before they approve of a business loan applied for. 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. Many loans applications are not approved by financial institutions if there is an individual associated with the company that has a low personal credit score.
The good things is that not every lending institution does this. They approve loan applications as long as the business has a sustained and consistent cash flow. They look at the business’ history of revenue to determine whether to provide the loan 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.
Credit scores used by businesses and individuals are calculated by three major credit bureaus. They are Experian, TransUnion and Equifax. When they calculate individual credit scores, there are differences and so the results are also quite different from each other. Lenders, on their own part, evaluate all three credit ratings before they give approval to your loan.
It is still possible to improve on your credit score if you find it rather low.
Your personal credit score can actually impact your business and success. Make sure you have a good credit score in order to have access to credit and loans when you need them. If you want your business to survive for a long time, take time and effort to rebuild your credit score if it does not look great at this point in time.