Your Credit Score and 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. If you make one wrong move as a business, then you cannot achieve your business plans and your bottom line can be at stake.
This brings us to the question about 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.
Your business can be affected by your credit score in a number of 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. Even if your business is doing great, a low credit score can indicate risk and financial burden to the individual which could impact his 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.
However, not every lending institution check personal credit scores. As long as the business is operating with sustained and consistent cash flow, these lending institutions will approve loan applications. A business’ history of revenue will be checked to enable them to determine if they will approve the loan application or not.
Anonymous donors and venture capitalists don’t look at personal credit scores to lend you money for your business. Individuals or investors usually grant a loan as long as you have a functional business plan or if your business is steadily doing well.
There are people who are not aware of what their personal credit score is. 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.
Credit scores used by businesses and individuals are calculated by three major credit bureaus. Experian, TransUnion, and Equifax are the three major credit bureaus that can calculate your credit score. 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.