Your Credit Score and Your Business
In this high competitive world, one would feel the fragility of your business existence. Finances and reputation are two important things that business owners should protect. Your business plans can fail and profits affected if you make a wrong move with your business.
How is your personal credit score? Your business can be affected by the state of your personal credit score. Below are some of the ways that credit score can impact your business.
There are many ways by which your credit score can potentially affect your business. Whether to be granted a loan or not can be affected by your personal credit score.
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 is very risky to business operations if a business owner has a low credit score, even if the business is doing good at present. If there is an individual associated with the company that has a low personal credit score, most financial institutions will not approve their loan application.
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.
Anonymous donors and venture capitalists don’t look at personal credit scores to lend you money for your business. 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 their credit scores. There are a lot of ways that you can know your credit scores and this is through free and premium services designed to keep you updated on this.
There are three major credit bureaus that do this service for business and individuals. They are Experian, TransUnion and Equifax. Their calculations are quite different to each other and they even sometimes show radically different results. However, most lenders evaluate all three credit ratings before deciding about lending you money.
It is then important to improve your credit score if at present it is not in its best form.
Your personal credit score can actually impact your business and 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.