Your Credit Score and Your Business
In a highly competitive marketplace, one can know how tenuous their business existence can be. 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.
With this in mind, one is led to think about how well your personal credit score is. 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.
Your business can be affected by your credit score in a number of ways. Business loans can be affected by your 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 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. 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. As long as the business is operating with sustained and consistent cash flow, these lending institutions will approve loan applications. What helps them determine whether to provide a loan or not is the business’ history of revenue.
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. They all have slight differences when they calculate individuals’ credit scores and sometimes that results that they display are radically different. 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.
Your business and success can greatly be affected by your personal credit score. 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. 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.
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