Ways Your Personal Credit Score can Affect Your Business
In a highly competitive marketplace, one can know how tenuous their business existence can be. Finances and reputation are two important things that business owners should protect. One business mistakes and it can affect the growth and prosperity of your business.
How is your personal credit score? Your business can be affected by the state of your personal credit score. 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 is very risky to business operations if a business owner has a low credit score, even if the business is doing good at present. 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.
However, not every lending institution check personal credit scores. They approve loan applications as long as the business has a 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 their credit scores. You can know your credit standing through free and premium services specifically designed to keep individuals updated on the current credit standing.
Credit scores used by businesses and individuals are calculated by three major credit bureaus. They are Experian, TransUnion and Equifax. Their calculations are quite different to each other and they even sometimes show radically different results. Lenders, on their own part, evaluate all three credit ratings before they give approval to your loan.
If you have a low credit score today, it is important to improve on it.
It is true that you personal credit score can impact your business and its success. Make sure you have a good credit score in order to 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.