Your Credit Score and Your Business
In a highly competitive marketplace, one can know how tenuous their business existence can be. It is very important that you protect your business interests in terms of finances and reputation. If you make one wrong move as a business, then you cannot achieve your business plans and your bottom line can be at stake.
How is your personal credit score? Your personal credit scored can affect the status of your business. 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. 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.
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.
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. 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 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. Experian, TransUnion, and Equifax are the three major credit bureaus that can calculate your credit score. When they calculate individual credit scores, there are differences and so the results are also quite different from each other. However, most lenders evaluate all three credit ratings before deciding about lending you money.
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 to keep your personal finances intact if you want to ensure that you have access to credit and loans when you need them. It takes time, effort, and money to rebuild your credit score but it is well worth it f you want to be around for long.